1st Quarter Performance: GDP
Not to beat it to death since the early news has already been out for a couple of weeks or more but the economy has shown definite slowing in the 1st quarter with GDP increasing only by an annualized 1.3 percent according to the Bureau of Economic Analysis. This is in comparison to the 4th quarter of 2006 where real GDP increased by 2.5 percent. The bureau cautions however that 1st quarter numbers are subject to revision and that the official, preliminary numbers will not be realeased until May 31st.
First quarter increases mainly reflected personal consumption expenditures (PCE) as well as state and local government spending. These numbers were undermined however by the negative contributions from residential fixed investment, private inventory investment, and federal government spending. The report also points out that imports, which are a subtraction in the calculation of GDP, increased.
The report summarizes…
“The deceleration in real GDP growth in the first quarter primarily reflected a downturn in exports, an upturn in imports, a deceleration in PCE for nondurable goods, and a downturn in federal government spending that were partly offset by a smaller decrease in private inventory investment, an upturn in equipment and software, a smaller decrease in residential fixed investment, and an acceleration in PCE for durable goods.”