The Bureau of Economic Analysis released the Q1 ’09 GDP numbers.

The annual rate of decline came in at the expected 6.1%  (a decline of 6.3% in real GDP).

Calculated Risk has an optimistic assessment of the Q1 numbers.

The optimistic case rests on the following:

• Declining residential investment contributed more to the GDP slump in Q1’09 than in Q4 ’08 and will likely come to an end by Q2’09, in keeping with its role as a leading indicator of recession.
• Simultaneously, the contributions of lagging indicators (like unemployment, declining investment in equipment & software, and declining non-residential investment) have increased.
• The over-weighting of lagging indicators in the decline of GDP signals the end of recession.
• Real personal consumption expenditure (PCE) was up in positive territory (2.2%) in Q1’09, where it was negative (4.3%) in Q4’08.

Mish Shedlock is less optimistic. He says that the Q1 ’09 rise in PCE is either an outlier  or temporary, and will be followed by another dip in 2010-11 and more trough for a few years.

Meanwhile, former Fed chairman Paul Volcker, head of Barack Obama’s economic team, thinks the economy is “leveling off,” according to this Bloomberg report.

Highlights of what Volcker is reported to have said:

• Bernanke is “doing a great job”
• the economy is functioning “by the grace of government intervention”
• a strong recovery is “going to take a while”
• “systemically important institutions” are going to be kept afloat
• the expansion of the Fed’s balance sheet to more than $2.2 trillion as of last week will likely lead to inflationary problems in 2-3 years, but not immediately
• Glass-Steagall (repealed in 1999) isn’t likely to be resuscitated but proprietary trading and commercial banking activity should be kept apart (Lila: how?)
• no regulation of hedge funds is likely but in the case of those that get too big capital requirements and a cap on leverage might be imposed (Lila: this is vague and opens the door to selective regulation)
• regulation of executive compensation isn’t likely but there could be a “quid pro quo” for federal aid. It would have to be a “culture of exchange” with Wall Street (Lila: more weasel words that allow for selective regulation).

Altogether, I thought Volcker’s comments were evasive, inadequate, and temporizing.