Global| Jul 29 2011U.S. GDP Growth Of 1.3% Disappoints
by:Tom Moeller
|in:Economy in Brief
Summary
The Commerce Department reported that real GDP grew just 1.3% (SAAR) last quarter. The figure was disappointing for several reasons. It fell short of Consensus expectations for 1.7% growth and it was the softest reading since Q2'09. [...]
The Commerce Department reported that real GDP grew just 1.3% (SAAR) last quarter. The figure was disappointing for several reasons. It fell short of Consensus expectations for 1.7% growth and it was the softest reading since Q2'09. Moreover, the gain followed a downwardly revised 0.4% in Q1 and the components showed widespread weakness. As if that wasn't enough, GDP fell a revised 3.5% during the recession year of 2009, nearly one percentage point more than earlier indicated.
Weakness in consumer spending continued to head the list of soft GDP components as it ticked up just 0.1% last quarter. Government spending, down 1.1%, followed with its third consecutive quarterly decline. It was paced by lower state & local purchases. Business investment continued to be the economy's bright spot and it grew 6.3%, though growth did lag its double-digit pace during much of last year. Finally, surprise-surprise, residential investment grew 3.8%, one of four positive quarters since 2005.
Inventories added negligibly to growth here in 2011. Moreover, the lessened rate of inventory building versus last year accounts for roughly two-thirds of the slowdown in GDP growth. Foreign trade had a small positive effect on growth last quarter as exports grew 6.0% (7.9% y/y) and imports rose 1.3% (4.7% y/y).
As for price inflation, the numbers for last quarter and Q1 remained much stronger than during 2010. That mostly reflects a pickup due to higher energy prices but revisions also showed more of a recent gain than reported earlier; to 2.4% versus 2.0%.
The latest GDP figures can be found in Haver's USECON and USNA databases. The government's pre-revision figures are contained in the USARC11 database. Consensus estimates can be found in AS1REPNA.
The Foreclosure Crisis in 2008: Predatory Lending or Household Overreaching? from the Federal Reserve Bank of St. Louis is available here.
| Chained 2005 $, % AR | Q2'11 (Adv) |
Q1'11 | Q4'10 | Q2'11 Y/Y |
2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Gross Domestic Product | 1.3 | 0.4 | 2.3 | 1.6 | 3.0 | -3.5 | -0.3 |
| Inventory Effect | 0.2 | 0.3 | -1.8 | -0.1 | 1.6 | -0.9 | -0.5 |
| Final Sales | 1.1 | 0.0 | 4.2 | 1.7 | 1.4 | -2.6 | 0.2 |
| Foreign Trade Effect | 0.6 | -0.3 | 1.4 | 0.2 | -0.4 | 1.0 | 1.2 |
| Domestic Final Sales | 0.5 | 0.4 | 2.7 | 1.5 | 1.8 | -3.6 | -1.0 |
| Demand Components | |||||||
| Personal Consumption | 0.1 | 2.1 | 3.6 | 2.1 | 2.0 | -1.9 | -0.6 |
| Business Fixed Investment | 6.3 | 2.1 | 8.7 | 7.0 | 4.4 | -17.9 | -0.8 |
| Residential Investment | 3.8 | -2.5 | 2.5 | -6.9 | -4.3 | -22.2 | -23.9 |
| Government Spending | -1.1 | -5.9 | -2.8 | -2.2 | 0.7 | 1.7 | 2.6 |
| Chain-Type Price Index | |||||||
| GDP | 2.3 | 2.5 | 1.9 | 2.0 | 1.2 | 1.1 | 2.2 |
| Final Sales of Domestic Product | 2.3 | 2.4 | 1.8 | 2.0 | 1.2 | 1.0 | 2.2 |
| Final Sales to Domestic Purchasers | 3.2 | 3.9 | 2.0 | 2.5 | 1.5 | -0.1 | 3.3 |
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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