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Economy in Brief

U.S. GDP Growth Is Revised Down; Profits Tick Higher
by Tom Moeller  May 31, 2012

GDP growth last quarter was more disappointing than initially estimated. Growth was revised down to 1.9% (SAAR) from 2.2% and it was the weakest advance since Q3'11. The figure matched Consensus estimates. The highest expected gain was 2.2%. Despite the disappointment, during the last four quarters growth of 2.0% was the swiftest since Q1'11.

Released for the first time, corporate profits nudged up 0.6% (6.5% y/y), roughly the same as during Q4. Profits in domestic financial industries rose 4.5% (1.2% y/y) while profits from nonfinancial industries ticked up just 0.6% (13.4% y/y). From abroad, corporate earnings fell 3.8% (-4.1% y/y).

A reduced estimate of inventory building's contribution to growth, to 0.2 percentage points from 0.6 points, had the largest effect lowering GDP growth last quarter. Foreign trade also subtracted marginally more as exports grew at a 7.2% rate (4.5% y/y) and imports rose 6.1% (3.1% y/y).

On the demand side, an upward revision to business investment growth to 1.9% (8.2% y/y) was accompanied by negligible revisions elsewhere. Growth in PCE was lessened to 2.7% (1.8% y/y) and government spending growth was a more-negative 3.9% (-2.3% y/y). Growth in residential investment was raised to 19.3% (8.9% y/y) as warm temperatures fueled growth.

Price inflation as measured by the chain-weight price index was raised slightly to 1.7% (1.9% y/y).

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail on the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Consensus estimates can be found in AS1REPNA.

Chained 2005 $,% AR Q1'12
(2nd Estimate)
Q1'12
(Adv)
Q4'11 Q3'11 Q1'12
Y/Y
2011 2010 2009
Gross Domestic Product 1.9 2.2 3.0 1.8 2.0 1.7 3.0 -3.5
 Inventory Effect 0.2 0.6 1.8 -1.4 0.1 -0.2 1.6 -0.9
Final Sales 1.7 1.6 1.1 3.2 1.9 1.9 1.4 -2.6
 Foreign Trade Effect -0.1 -0.0 -0.3 0.4 0.1 0.1 -0.4 1.0
Domestic Final Sales 1.7 1.6 1.3 2.7 1.8 1.8 1.8 -3.6
Demand Components
Personal Consumption 2.7 2.9 2.1 1.7 1.8 2.2 2.0 -1.9
Business Fixed Investment 1.9 -2.1 5.2 15.7 8.2 8.8 4.4 -17.9
Residential Investment 19.3 19.0 11.7 1.2 8.9 -1.3 -4.3 -22.2
Government Spending -3.9 -3.0 -4.1 -0.1 -2.3 -2.1 0.7 1.7
Chain-Type Price Index
GDP 1.7 1.5 0.9 2.6 1.9 2.1 1.2 1.1
Final Sales of Domestic Product 1.7 1.5 0.9 2.6 1.9 2.1 1.2 1.0
Final Sales to Domestic Purchasers 2.5 2.4 1.1 2.0 2.2 2.5 1.5 -0.1
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