U.S. GDP Growth Weakens in Q1’24
by:Tom Moeller
|in:Economy in Brief
Summary
- Quarterly growth is slowest since mid-2022.
- Inventories & foreign trade subtract from growth.
- Domestic final demand gain moderates.
- Price index growth accelerates.
Real GDP grew 1.6% (SAAR) in Q1’24 in this advance estimate, following a 3.4% gain in Q4’23 and a 4.9% Q3’23 rise. A 2.4% increase had been expected in the Action Economics Forecast Survey. Real GDP grew 3.0% on a Q1/Q1 basis after a 3.1% rise in 2023 and a 0.7% gain in 2022.
The growth slowdown last quarter stemmed from reduced contributions to growth from the change in business inventories and international trade. Inventories subtracted 0.35 percentage point from growth last quarter following a 0.47 point subtraction in Q. Net exports subtracted 0.86 percentage point after adding 0.25 percentage point in Q4. Exports grew 0.9% (0.3% y/y) which followed a 5.0% Q4 rise. Imports strengthened 7.2% (1.3% y/y) after rising 2.2% in Q4.
Growth in real final sales to domestic purchasers of 2.8% (2.9% y/y) followed two quarters of 3.5% gain. Personal consumption expenditures rose 2.5% (2.4% y/y) after a 3.3% increase in Q4, adding 1.7 percentage points to Q1 growth.
Durable goods spending declined 1.2% (+2.0% y/y) last quarter following a 3.2% gain. Motor vehicle expenditures fell 9.0% (-5.3% y/y) after declining 1.7%. Furniture & appliance buying rose 4.0% (2.8% y/y) after a 1.7% gain in Q4. Recreational goods & vehicle purchases fell 1.5% (+8.3% y/y) after strengthening 7.5% in Q4.
Nondurable goods outlays held steady (+1.9% y/y), following 2.9% growth in Q4. Apparel outlays rose 5.3% (1.8% y/y) after a 3.4% increase while food & beverage spending rose 1.0% (1.2% y/y) following a 0.8% gain. Outlays on gasoline & other energy products declined 10.9% (+0.1% y/y) after rising 4.3% in Q4.
Spending on services increased 4.0% last quarter (2.6% y/y) after a 3.4% gain. Housing & utilities outlays rose 1.4% (1.3% y/y) after a 0.1% Q4 improvement. Health care purchases rose 5.5% (4.6% y/y) following a 7.8% increase. Transportation services outlays growth of 4.6% (3.3% y/y) was improved from a 4.2% Q4 rise. Restaurant & hotel accommodations fell 2.0% (+2.6% y/y) after gaining 6.5% in Q4, while growth in recreation outlays jumped 4.8% (2.2% y/y) after a 0.4% rise in Q4.
Business fixed investment increased 2.9% (3.9% y/y) last quarter, following a 3.8% Q4 rise, but spending on nonresidential structures eased 0.1% (+9.4% y/y) after surging 10.9% in Q4. Equipment investment increased 2.1% (1.0% y/y) after falling 1.1%. Information processing investment strengthened 12.2% (+2.2% y/y) following an 11.4% rise, while industrial equipment outlays grew 17.8% (1.4% y/y), after holding steady. Transportation equipment spending offset these gains and weakened 25.6% (-1.3% y/y) about as they did in Q4. Investment in intellectual property products rose 5.4% (3.6% y/y), after a 4.3% rise.
Residential structures investment surged 13.9% (5.1% y/y) in Q1, adding to two consecutive quarters of firm increase.
Government spending increased 1.2% (3.7% y/y), accounting for 0.21 percentage points of GDP growth, after a 4.6% rise. Federal government spending eased 0.2% (+2.5% y/y) following a 2.4% increase. State & local government spending grew 2.0% (4.4% y/y), after a 6.0% Q4 rise.
The GDP price index rose 3.1% (2.5% y/y) last quarter after a 1.6% Q4 gain. The rise was double expectations for a 1.6% Q1 increase. The PCE price index increased 3.4% (2.6% y/y) after a 1.8% rise. The PCE price index excluding food and energy prices rose 3.7% (2.9% y/y) after increasing 2.0% for two straight quarters. The PCE goods price index fell 0.5% (-0.2% y/y) after falling 1.4% and services prices rose 5.4% (4.0% y/y), after a 3.4% rise. The services price index less energy & housing rose 5.1% (3.5% y/y) after a 2.6% rise.
The business fixed investment price index rose 1.4% (1.1% y/y) following a 2.0% rise. The residential investment price index increased 0.6% (2.1% y/y) following two quarters of roughly 4.0% gain. The government spending price index rose 3.8% (2.4% y/y) after rising 1.9% in the fourth quarter.
The GDP data 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. The Action Economics consensus estimates can be found in AS1REPNA.
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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