Personal consumption expenditures (PCE), a measure of consumer spending on goods and services, rose 1.5 percent from the fourth quarter, with spending on nondurable goods up 9.6 percent. Americans did continue to trim their spending on services, which fell 0.6 percent, and all together PCE contributed 1.08 percent to GDP – still below norms but a solid improvement from its steady decline over the past year.

On the business side of the GDP equation, gross private domestic investment continued to fall, posting a steep 8.27 percent decline in the first quarter. Business spending fell across all the subcategories, with equipment and software posting the largest decline of 2.52 percent. That’s hardly surprising with businesses putting off capital investment until they see surer signs of recovery.

On the upside, private inventories fell by 2.34 percent as businesses continue running through their excess stock.

Since it will take time to stabilize the employment situation and construction spending, I wouldn’t expect a positive GDP reading in the third quarter but prospects for the fourth are certainly looking up. I would expect the find number for the first quarter to improve a bit more from these levels.

The manufacturing sector also showed some improvement in April as durable goods orders ticked up by 1.9 percent. The reading for March was also revised downward to a 2.1 percent decline.

Over the past few months orders have been bouncing around in a four percent range, seeming to indicate that they may have found a bottom. Orders for raw materials have also ticked up a bit, indicating the manufacturers have burned their inventories and are buying more.

Initial jobless claims numbers also showed a slight improvement, falling by 13,000 filings to 623,000. We should expect that to be short-lived though if GM (NYSE: GM) files for bankruptcy as expected on Monday. Meanwhile, continuing claims continue their climb upward to 6.788 million from a revised 6.678 million.

Despite a fairly sharp increase in mortgage delinquencies in the first quarter, up to 9.12 percent from 7.88 percent in the fourth, encouraging signs continue to come out of real estate.

Existing home sales rose by 2.9 percent in April, hitting an annual rate of 4.68 million units, as buyers scooped up distressed properties that accounted for 45 percent of total sales. New home sales also rose a slight 0.3 percent as builders continue marking down inventories and offering other incentives in order to drive sales.

So, while the sale of distressed properties and builder markdowns have helped to drive numbers to some extent, it has kept pressure on prices as well. The median price for an existing home falling 15.4 percent to $170,200 and prices are likely to continue falling while there’s still a huge overhang of supply. Those low prices combined with historically low mortgage rates and an $8,000 tax credit for first-time home buyers is likely to provide further stimulation of buying activity. So while the bottom likely hasn’t been felt for real estate, inventory is growing more rapidly than sales with 10.2 months of supply on the market and we likely don’t have much farther to fall as prices in most areas of the country are falling within range of their long-term norms.

Finally, consumer confidence reached an eight-month high, climbing to 54.9 in May from 40.8. While most respondents reported that they view the current economic situation as only moderately improved, most were optimistic that the economy would stabilize in coming months. That’s a positive omen for consumer spending in the coming months, which would be a major positive for recovery.

All told, the picture continues to improve.