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.
Author: Carl Kelly, Economist