Global| Jun 24 2011U.S. GDP Growth Little-Revised And Weak
by:Tom Moeller
|in:Economy in Brief
Summary
In its "final" estimate of economic growth last quarter, the Commerce Department still didn't find much that was materially different from its "advance" reading. Real GDP grew 1.9% (SAAR), the weakest growth since Q2'10. The Q1 [...]
In its "final" estimate of economic growth last quarter, the
Commerce Department still didn't find much that was materially different
from its "advance" reading. Real GDP grew 1.9% (SAAR), the
weakest growth since Q2'10. The Q1 estimate fell short of Consensus
expectations for 2.0% growth. Little economic momentum is expected in the
near future. The National Association for Business Economics recently
lowered its 2011 GDP growth estimate to 2.8% from 3.3% and also lowered
next year's forecast to 3.2% from 3.4%.
The Q1 gain in corporate profits was strengthened slightly to 2.9% (10.2% y/y). Profits from abroad led the gain with a 14.6% increase (10.0% y/y). Nonfinancial sector earnings rose 6.9% (11.8% y/y) but earnings in the financial sector fell 15.5% (+6.7% y/y).
Weakness in last quarter's GDP components was widespread. The 2.2% (AR) gain in personal consumption of 2.2% was unrevised but the gain in business fixed investment of 2.0% was set back to the initial figure. The 1.9% decline in residential investment was roughly half initial figure. Finally, the decline in government spending was little-changed at 5.8%, still the most negative for any quarter since 1983. Lower defense purchases caused federal spending to fall at an 8.0% rate (+2.1% y/y) while budget shortfalls pulled state & local spending down at a 4.1% rate (-1.4% y/y), the most in a year.
Improvement in the foreign trade deficit added 0.1 percentage points to last quarter's GDP gain, though export growth of 7.7% (8.0% y/y) was revised down but it still exceeded the increased 5.1% rise (9.4% y/y) in imports. Quicker inventory accumulation added a little-revised 1.3 percentage points to GDP growth.
Price inflation as measured by the chained GDP price index quickened last quarter to a 2.0% rate, double last year's gain. The price index for domestic final demand jumped 3.9% (1.6% y/y) and the price index for final sales rose 2.0% (1.6% y/y). The GDP figures are available in Haver's USECON and USNA databases and the expectations number is in AS1REPNA.
| Chained 2005 $, % AR | Q1'11 Final |
Q1'11 Prelim. |
Q1'11 Adv. |
Q4'10 | Q3'10 | Q1'11 Y/Y |
2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|---|---|
| GDP | 1.9 | 1.8 | 1.8 | 3.1 | 2.6 | 2.3 | 2.9 | -2.6 | -0.0 |
| Inventory Effect | 1.3 | 1.2 | 0.9 | -3.4 | 1.6 | 0.0 | 1.5 | -0.5 | -0.5 |
| Final Sales | 0.6 | 0.6 | 0.8 | 6.7 | 0.9 | 2.3 | 1.4 | -2.1 | 0.5 |
| Foreign Trade Effect | 0.1 | -0.1 | -0.1 | 3.3 | -1.7 | -0.4 | -0.5 | 1.0 | -1.1 |
| Domestic Final Demand | 0.5 | 0.7 | 0.9 | 3.2 | 2.6 | 2.7 | 1.8 | -3.1 | -0.6 |
| Demand Components | |||||||||
| Personal Consumption | 2.2 | 2.2 | 2.7 | 4.0 | 2.4 | 2.7 | 1.8 | -1.2 | -0.3 |
| Business Fixed Investment | 2.0 | 3.4 | 1.8 | 7.7 | 9.1 | 9.5 | 5.7 | -17.1 | 0.3 |
| Residential Investment | -1.9 | -3.3 | -4.1 | 3.3 | -27.3 | -1.9 | -3.0 | -22.9 | -24.0 |
| Government Spending | -5.8 | -5.1 | -5.2 | -1.7 | 3.9 | 0.0 | 1.0 | 1.6 | 2.8 |
| Prices | |||||||||
| Chained GDP Price Index | 2.0 | 1.9 | 1.9 | 0.4 | 2.1 | 1.6 | 1.0 | 0.9 | 2.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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