• Domestic demand growth reduced.

• Int'l trade deficit continues to subtract near-record from GDP growth.

• Inventory decumulation lessened.

U.S. real GDP fell 1.6% (+3.5% y/y) during Q1'22, revised from the second estimate of a 1.5% weakening issued last month. The decline followed a 6.9% rise during Q4'21 and was the only quarter of negative growth since the end of the recession in Q2'20. The Action Economics Forecast Survey expected a 1.4% decline.

After-tax corporate profits rose 1.0% (15.2% y/y), revised from 1.5%. The gain followed a 0.8% slip in Q4'21. Profits before tax declined a minimally changed 2.2% (+12.6% y/y). Nonfinancial sector earnings eased 0.3% (+15.8% y/y), revised from -1.1% and remained the first decline in five quarters. Financial sector profits fell a deepened 9.3%, revised from -5.2% and earnings from abroad weakened 1.5% (11.5% y/y), revised from -3.2%.

Inventory liquidation reduced growth by 0.4 percentage points, revised from -1.1 percentage points. Deterioration in the foreign trade balance subtracted an unchanged, near-record 3.2 percentage points from growth last quarter as exports fell 4.8% (+4.4% y/y) and imports jumped 18.9% (12.0% y/y).

Growth in final demand to domestic purchasers was lessened to 2.0% (3.2% y/y) from 2.7% following 5.3% growth in Q4'21. Personal consumption rose 1.8% (4.5% y/y), revised from 3.1%. In the services area, recreation expenditures rose a lessened 1.9% (20.3% y/y), revised from 6.1% while restaurant & hotel spending rose a little-changed 5.2% (19.5% y/y). Health care expenditures eased 0.4% (4.5% y/y), revised from +2.3%, while outlays on housing & utilities firmed a little-changed 3.6% (1.4% y/y). Motor vehicle expenditures rose a little-changed 16.2% (-10.5% y/y) but spending on recreational goods & vehicles was lowered to 5.2% (5.6% y/y) from 6.9%. Furniture & appliance purchases fell 4.8% (-5.2% y/y), previously -3.9%. ln the nondurable goods sector, apparel spending declined 5.2% (+6.1% y/y), revised from -4.9% while gasoline expenditures fell 11.4% (+8.0% y/y), revised from -14.4%.

In the business investment sector, spending rose 10.0% (5.9% y/y), revised from 9.2%. Structures investment eased 0.9% (-4.1% y/y), revised from -3.6%. Equipment investment strengthened 14.1% (6.5% y/y), revised from 13.2%. Investment in computers strengthened a little-changed 24.7% (9.9% y/y) and industrial equipment investment rose a little-changed 13.0% (16.3% y/y). Transportation equipment investment fell a lessened 7.9% (-6.8% y/y). Investment in intellectual property products increased a little-revised 11.2% (10.4% y/y).

Residential investment edged higher by a minimally changed 0.5% (-4.4% y/y) last quarter.

In the government sector, spending declined a little-changed 2.9% (-1.7% y/y). Federal government outlays fell 6.8% (-5.4% y/y), revised from -6.0% as defense spending declined a deepened 9.8% (-4.7% y/y). State & local government outlays eased a minimally changed 0.5% (+0.7% y/y).

Pricing power continued to strengthen last quarter. The 8.2% increase (6.8% y/y) in the chain-type price index compared to 8.1% reported last month. It compared to expectations for an 8.1% rise. It was the largest increase since Q1'81, paced by a minimally changed 18.2% (15.0% y/y) surge in the cost of residential investment. Overall consumer prices rose a minimally changed 7.1% (6.3% y/y). The nondurable consumer goods price index rose a minimally changed 15.0% (8.9% y/y) with the surge in gasoline prices. The durable consumer goods price index rose a little-changed 6.5% (10.9% y/y) and the consumer services price index gained a little-changed 4.6% both q/q and y/y. Outside of food & energy, the PCE price index increased 5.2% both q/q and y/y. The business investment price index increased 7.0% (5.0% y/y), revised from 7.2%. The government sector price index increased a minimally changed 9.8% (7.4% y/y).

The GDP figures can be found in Haver's USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts. Both databases include tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be found in AS1REPNA.

Credit Conditions in the Pandemic Mortgage Market from the Federal Reserve Bank of San Francisco is available here.