Diving Into the GDP Report of -2.9% Growth
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The first quarter GDP initial projection was 0.1%. The second estimate came in at -1.0%. Today the third estimate came in at -2.9%.
Gosh, first quarter weather was far worse than anyone realized.
Let's dive into the First Quarter 2014 Third Estimate from the BEA for some weather-details.
Real GDP declined 2.9 percent in the first quarter, after increasing 2.6 percent in the fourth. The downturn reflected a downturn in exports, a larger decrease in private inventory investment, a deceleration in PCE, and downturns in nonresidential fixed investment and in state and local government spending, partly offset by an upturn in federal government spending.
Prices
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.3 percent in the first quarter, the same increase as in the second estimate; this index increased 1.5 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in the first quarter, compared with an increase of 1.8 percent in the fourth.
Components
- Real personal consumption expenditures increased 1.0 percent in the first quarter, compared with an increase of 3.3 percent in the fourth.
- Durable goods increased 1.2 per cent, compared with an increase of 2.8 percent.
- Nondurable goods decreased 0.3 percent, in contrast to an increase of 2.9 percent. Services increased 1.5 percent, compared with an increase of 3.5 percent.
- Real nonresidential fixed investment decreased 1.2 percent in the first quarter, in contrast to an increase of 5.7 percent in the fourth. Nonresidential structures decreased 7.7 percent, compared with a decrease of 1.8 percent. Equipment decreased 2.8 percent, in contrast to an increase of 10.9 percent.
- Intellectual property products increased 6.3 percent, compared with an increase of 4.0 percent.
- Real residential fixed investment decreased 4.2 percent, compared with a decrease of 7.9 percent.
- Real exports of goods and services decreased 8.9 percent in the first quarter, in contrast to an increase of 9.5 percent in the fourth.
- Real imports of goods and services increased 1.8 percent, compared with an increase of 1.5 percent.
- Real federal government consumption expenditures and gross investment increased 0.6 percent in the first quarter, in contrast to a decrease of 12.8 percent in the fourth. National defense decreased 2.5 percent, compared with a decrease of 14.4 percent. Nondefense increased 5.9 percent, in contrast to a decrease of 10.0 percent.
- Real state and local government consumption expenditures and gross investment decreased 1.7 percent; it was unchanged in the fourth quarter.
- The change in real private inventories subtracted 1.70 percentage points from the first-quarter change in real GDP , after subtracting 0.02 percentage point from the fourth-quarter change.
- Private businesses increased inventories $45.9 billion in the first quarter, following increases of $111.7 billion in the fourth quarter and $115.7 billion in the third. Real final sales of domestic product -- GDP less change in private inventories -- decreased 1.3 percent in the first quarter, in contrast to an increase of 2.7 percent in the fourth.
Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, decreased 2.6 percent in the first quarter, in contrast to an increase of 2.6 percent in the fourth . For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change.
Key Item Synopsis
- Exports (which add to GDP) were down 8.9%.
- Imports (which subtract from GDP) were up 1.8%.
- Durable goods were up 1.2%
- Nonresidential fixed investment decreased 1.2%
- Consumer prices rose 1.3%.
- Federal spending was up 0.6%
- Personal spending was up 1.0%.
GDP and GDI match over time. GDP was down 2.9% while GDI was down 2.6%. Take your choice. The numbers are awful.
Clearly the weather was far worse than anyone imagined.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
