US economic growth came in at a 1.1% annual rate in the first quarter with consumer spending increasing at a 3.7% annual rate. The headline number doesn’t tell the whole story though. Inventory liquidation subtracted significantly from the headline number. Excluding inventory liquidation, GDP would have come in at a 3.4% annual rate. Based on the initial GDP data, the long-anticipated recession hasn’t started yet, though it is true that certain sectors of the economy are contracting.

The recession so many investors are expecting didn’t come in the first quarter. It might not come in the second quarter, either.

The Commerce Department on Thursday reported that real, or inflation-adjusted, gross domestic product grew at a 1.1% annual rate in the first quarter. That was lower than the fourth quarter’s 2.6% and below the 2% economists polled by The Wall Street Journal had forecast. Still, it counted as a solid report.

A pair of late-breaking releases this week—a new benchmarking of retail sales figures on Monday that pointed to softer consumer spending growth, and a durable goods report on Wednesday that indicated a weakening in business investment—suggested that first-quarter GDP would come up short of economists’ estimates.

But Thursday’s report showed that consumer spending grew at a 3.7% annual rate last quarter, better than the fourth quarter’s 1%. And business investment was a modest positive. Final sales to private domestic purchasers, which measures underlying demand in the economy, grew at a solid 2.9% in the first quarter after flatlining in the fourth quarter.

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