Thursday, May 30, 2013

First Quarter GDP Revised Down to 2.4%

Real economic growth for the first quarter was revised down by 0.1% to 2.4% in the BEA’s second estimate released today. Despite the modest downward revision, first quarter growth is still well above the 0.4% growth seen in 4Q12.

As we previously noted following the BEA’s initial estimate, consumption drove first quarter GDP growth, and was revised up in the second estimate from 2.2% to 2.4%. Inventories, which were revised down in the second estimate to 0.6% from 1.0, still recovered in the first quarter. This follows a steep decline in the 4th quarter of 2012, likely due in part to Hurricane Sandy.

The government spending drag increased in the revision by 0.2% to 1.0%. Although less than the 1.4% drag last quarter, spending cuts continue to present a strong headwind to the U.S. economy. Net exports were less of a drag on the economy in the second revision, decreasing from .5% to .2%.

Read the BEA release.

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