Keeping you up to date on the latest data releases.
Real GDP was revised down in the first quarter from an annualized growth rate of 2.2 percent to 1.9 percent, according to the Burea of Economic Analysis’s second estimate. The downward revision was primarily the result of downward revisions to private inventories, along with relatively minor downgrades to net exports, state and local government spending, and consumption. These downward revisions were partially offset by a fairly sizeable upward revision to nonresidential fixed investment. Nonresidential fixed investment was revised up from a decrease of 2.1 percent to a 1.9 percent increase in the first quarter, and is now adding 0.2 percentage points (pp) to real GDP growth in the first quarter, as opposed a 0.2 pp subtraction in the previous estimate. Both structures and equipment and software were revised up in the second estimate. The upward adjustment to structures was the more substantial of the two (though not quite enough to turn the growth rate positive), as structures were revised up from a 12.0 percent decline to just a 3.3 percent decline in the first quarter.
Private inventories suffered the largest knockdown during the revision, lessening its contribution to quarter one output growth by 0.4 pp to 0.2 pp. Both exports and imports were nudged up during the revision, but their net combined contribution to output growth fell by a little less than 0.1 pp. Downward revisions to other categories were relatively minor. While headline GDP growth was knocked down by 0.3 pp in the first quarter, because most of that downward revision was due to inventories, final sales was only nudged down by 0.1 pp to 1.6 percent, and its four-quarter growth rate was unchanged at 1.9 percent.
Finally, this release contained our first look at the first quarter’ real Gross Domestic Income (GDI), which rose 2.7 percent, roughly in line with its readings over the previous two quarters of 2.6 percent. While this measure points to a little more near-term strength in the growth trajectory, over the past year the growth rate of both real GDI and real GDP stands at 2.0 percent.