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Real GDP grew in the first quarter at a seasonally-adjusted annualized rate of 2.5 percent, according to the advanced estimate. This is up from 0.4 percent in the fourth quarter, but below consensus expectations which were primarily around 3.0 percent. On a year-over-year basis, the growth rate for real GDP improved slightly to 1.8 percent.
Primarily driving GDP growth in the first quarter were increases in real personal consumption expenditures and private inventories. Personal consumption expenditures increased 3.2 percent during the quarter, compared with an increase of 1.8 percent in the fourth quarter of 2012, and contributed 2.2 percentage points to overall growth during the first three months of the year. Changes in inventories contributed 1.0 percentage point to GDP growth this quarter, compared with a contribution of −1.5 percentage points to GDP growth in the previous quarter. Fixed investment continued to contribute positively to GDP, adding 0.5 percentage points to GDP during the quarter. This makes seven consecutive quarters of positive contributions from this category.
Offsetting those gains were decreases in net exports and government spending, which contributed −0.5 percent and −0.8 percent to the change in overall GDP, respectively. Real imports of goods and services increased 5.4 percent while exports increased 2.9 percent, leading to an overall decline in net exports. Government spending decreased −4.1 percent in the first quarter, following a −7.0 percent decline in the last quarter. Most of the change in government spending is coming at the national level, as federal government spending declined −14.8 in the final quarter of last year and −8.4 percent in the first quarter of this year.