Here's for not understanding GDP numbers

In addition to the plethora of economic information coming out today, advance GDP numbers came out for quarter 1 early this morning. I'm not surprised that the current account deficit narrowed, that is to be expected with a weaker dollar. Looking at the percentage change table, it is clear that inventories were strong and services were strong. The increase in inventories was responsible for a 20 billion dollar increase, but the increase in services was responsible for a 40 billion increase. The Q4 inventory data was pretty awful, so I'm not surprised there was a bit of mean-reversion. However, I'm more surprised at services being as strong as they are.

If you go into table 2.3.1 (or 2.3.6), you will see why services are strong. Basically, in spite of a housing recession, spending on housing (services, not to be confused with residential investment) goes up. I'm not surprised that housing operation is going up (electricity is increasing at a 15% rate), but I'm a little baffled why in the middle of dramatic decreases in home prices and sales that spending on housing would be increasing. Medical care and household operation (electricity mostly) make up a big percentage of the increase in services (and therefore services), roughly half. And another large increase is due to other. The big question I have is, why isn't spending on housing services decreasing in the GDP numbers rather than consistently increasing? The durable goods section showed only a small decrease, but the average increase since 2006 in the housing services number has been .6% and increased by .55% this time. Effectively in line. Granted that the ISM non-manufacturing index was below 50 the entire quarter, it makes even less sense why services would be increasing.

Ultimately, if you use better inflation numbers or per-capita figures, this would probably be the second quarter of a declining GDP. Not the best definition of whether we are in a recession, but it's what the financial press usually talks up.