--- title: How to Interpret the 2.5% GDP Growth Rate | TIME description: TIME's Rana Foroohar explains whether the new GDP growth rate figure is good or bad – and what we can expect for the rest of the year. canonical: https://time.com/video/dDSmffB4/ og:title: How to Interpret the 2.5% GDP Growth Rate og:description: TIME's Rana Foroohar explains whether the new GDP growth rate figure is good or bad – and what we can expect for the rest of the year. og:url: https://time.com/video/dDSmffB4/ og:image: https://cdn.jwplayer.com/v2/media/dDSmffB4/poster.jpg?width=720 og:type: video.other twitter:card: summary_large_image twitter:title: How to Interpret the 2.5% GDP Growth Rate twitter:description: TIME's Rana Foroohar explains whether the new GDP growth rate figure is good or bad – and what we can expect for the rest of the year. twitter:image: https://cdn.jwplayer.com/v2/media/dDSmffB4/poster.jpg?width=720 --- # How to Interpret the 2.5% GDP Growth Rate > Sponsored content. 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They are at time.com/newsletters and are separate from a paid subscription. ## Video: How to Interpret the 2.5% GDP Growth Rate [Watch (HLS stream): How to Interpret the 2.5% GDP Growth Rate](https://cdn.jwplayer.com/manifests/dDSmffB4.m3u8) (2:06)  _Published 2013-04-26. TIME's Rana Foroohar explains whether the new GDP growth rate figure is good or bad – and what we can expect for the rest of the year._ --- Jul 27, 2023 3:33 PM UTC --- ## More From This Series [All Videos](https://time.com/video/) [China's Economy Surprised in First Quarter, Marks 6.4% Growth in GDP](/video/M6zlBnqE/) ### China's Economy Surprised in First Quarter, Marks 6.4% Growth in GDP [President Trump Says GDP Growth Next Quarter Could Be 'In the 5s'](/video/U5VQtSyN/) ### President Trump Says GDP Growth Next Quarter Could Be 'In the 5s' [Rana Foroohar: Surprising Deficit Numbers Highlight Growth](/video/eIrzbWgd/) ### Rana Foroohar: Surprising Deficit Numbers Highlight Growth --- ## Transcript I'm Time assistant managing editor, Rana Foroohar, and I'm here in our newsroom reporting on the U. S. GDP figures for the first quarter which have come in at 2. 5 %. That was weaker than what most economists were expecting, which was around 3 %. But it's better than what a lot of commentators, including me, were thinking would be the case. We've been in a 2 % economy now for some time. So what does it mean that the first quarter is coming in at 2. 5 %? Is the glass half full or half empty? Depends on what you look at. So let's start with government spending. This was the biggest contributor to the less optimistic figure of 2. 5 %. In the fourth quarter of 2012 and in the first quarter of this year, we saw the biggest six month contraction in government spending that we've seen since the end of the Korean War, so that's a huge hit. The public sector is simply not contributing to GDP growth. On the more positive side, consumers are doing their part with spending. Consumers open their wallets, they've done the hard work of getting their balance sheets in order over the last couple of years since the end of the financial recession and the recovery. And they are spending now, they were the biggest single contributor to growth in that first quarter. Business spending was also up a little bit as were inventories. Businesses had really been in a holding mode at the end of last year, and they finally started spending when they saw that the debt wrangling that we saw at the end of 2012 wasn't going to continue on as expected. The big question now is what the second quarter is gonna look like. And unfortunately, some of the early indicators we're getting are pretty weak. Retail spending has been fairly muted in March. I feel that the big X factor is going to be housing. We've been in the middle of a hosing recovery, a lot of commentators think that that has a lot of room to run. But if unemployment remains as high as it is and wages remain as compressed as they are, it'll be interesting to see how much consumers really can continue to shell out. I'm expecting the second quarter GDP figures to be weaker than these. 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