United States GDP

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United States: Revised Q1 data reveal first contraction in GDP since 2011

May 29, 2014

In the first quarter, GDP contracted at a seasonally adjusted annualized rate (SAAR) of 1.0% according to the second estimate released by the Bureau of Economic Analysis (BEA) on 29 May. The print marked a significant downward revision to the 0.1% expansion reported in the advance estimate and was more negative than market expectations of a 0.5% decline. The revised first quarter reading, which represented the first contraction in GDP since Q1 2011, mainly reflected that the decrease in inventory restocking was greater than initially reported.

On the domestic side of the economy, private consumption rose 3.1% (advance estimate: +3.0% quarter-on-quarter SAAR). Non-residential fixed investment fell 1.6% (advance estimate: -2.0% quarter-on-quarter SAAR). Meanwhile, residential fixed investment contracted 5.1% (advance estimate: -5.8% qoq SAAR). Business inventories subtracted 1.6% to economic growth, which was below the 0.6% fall originally reported. Government spending decreased 0.8% in Q1 (advance estimate: -0.5% qoq SAAR).

On the external front, exports were revised up, but still contracted and imports were revised up to an expansion. According to the second estimate, exports fell 6.0% in Q1 (advance estimate: -7.6% qoq SAAR), while imports increased 0.8% (advance estimate: -1.4% qoq SAAR). As a result of the growth in imports, the external sector’s net contribution to overall growth was revised down from minus 0.8 percentage points to minus 1.0 percentage points.

The Federal Reserve expects economic growth to range between 2.8% and 3.0% in 2014 and between 3.0% and 3.2% in 2015. FocusEconomics Consensus Forecast panelists are slightly less optimistic than the Fed and expect GDP to expand 2.6% in 2014, which is down 0.2 percentage points from last month’s forecast. For 2015, the panel expects the economy to expand 3.0%.

Author:, Economist

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United States GDP Chart

USA GDP Q1 2014 0

Note: Quarter-on-quarter annualized changes and annual variation of seasonally adjusted GDP in %.
Source: Bureau of Economic Analysis and FocusEconomics Consensus Forecast.

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