Archive for the 'GDP by Industry' Category

New BEA Data Provide Insights on How Harsh Winter Impacted Industries in First Quarter

How much did the harsh winter weather affect the U.S. economy in the first quarter of this year?

We know that the economy, as measured by gross domestic product (GDP), contracted at an annual rate of 2.9 percent over January, February and March, the first quarterly decline in three years. But how were different industries affected and was weather a factor? New data released today by the U.S. Bureau of Economic Analysis provide fresh insights on that front.

The economy’s downturn in the first quarter was widespread, with 19 of 22 major industry groups contributing to the drop in U.S. economic activity, the new BEA data show. Some of the leading contributors to the downturn included industries that were impacted by the unusually harsh winter weather that hit most of the United States, including “agriculture, forestry, fishing, and hunting.”
Weather1_7_25_14Severe weather conditions can have both positive and negative (although mostly negative) effects on the Nation’s economic performance. For some industries this is intuitive, like “agriculture, forestry, fishing, and hunting” and “construction;” for other industries, like “mining,” and “nondurable-goods manufacturing,” the link may not be as intuitive.

Weather2_7_25_14Real value added —a measure of an industry’s contribution to GDP—for agriculture, forestry, fishing, and hunting declined 31 percent in the first quarter, reflecting a drop in the production of farm-type products, including livestock and dairy.

Construction fell almost 9 percent, reflecting a notable decline in nonresidential construction activity that began in January and continued through March; unusually cold and wet weather hampered construction activity.

Perhaps somewhat surprising, the utility industry also contributed to the decline in GDP in the first quarter. While demand for additional utilities, for example electricity generation, was evident with the severe winter weather, a surge in the costs of the inputs used by the utilities industry—things like energy, materials, and purchased services used in the production process—caused real value added to drop over 16 percent in the first quarter.

Real value added for mining fell 5.6 percent, driven in part by the weather. As with utilities, inputs played a critical role. Part of the increase in input costs in mining reflected increased demand for natural gas that was used to prevent ‘wellhead freeze-offs,’ of which the likelihood increases as temperatures fall.

As noted, the abnormally harsh weather did not have a negative impact on all industries. For example, consumer spending data released with the “third” GDP estimate on June 25th revealed that real household consumption of fuel oils increased in the first quarter, which is reflected in the growth for nondurable goods manufacturing, which includes the petroleum refining industry (nondurable goods manufacturing was up 15 percent).

In the first quarter of 2014 the weather—given the unusually harsh conditions—had a more significant impact than normal on U.S. economic activity. For some industries, the weather linkages are more apparent than in others. Yet even in these industries, it is not possible to explicitly identify impacts on the U.S. economy and industry performance from the weather. Still, many of the examples above illustrate the important features that the GDP by industry framework provides, enabling complete industry analysis on the sources of U.S. economic activity, including supply chain analysis.

Gross Domestic Product by Industry: First Quarter 2014

Real gross domestic product (GDP) decreased at an annual rate of 2.9 percent in the first quarter of 2014. Both private services- and goods-producing industries contributed to the decrease, while the government sector increased slightly.

  • Overall, 16 of 22 industry groups contributed to the decrease in U.S. economic activity. The leading contributors to the decrease were durable-goods manufacturing; wholesale trade; and agriculture, forestry, fishing, and hunting.

GDPbyIndustry1_7_25_14

Real GDP turned down in the first quarter, declining 2.9 percent after an increase of 2.6 percent in the fourth quarter of 2013.

  • Overall, 19 out of 22 industry groups contributed to the downturn in the percent change in real GDP. The leading contributors to the downturn were wholesale trade; professional, scientific, and technical services; and durable-goods manufacturing.

GDPbyIndustry2_7_25_14

Read the full report.

New Commerce Data Supports Better Economic Decision-Making by Businesses and Policymakers

This week, the Commerce Department’s Bureau of Economic Analysis (BEA) released two new data products that will help American businesses, consumers, policymakers and academia gain important information about the performance of the U.S. economy.

Yesterday, BEA released inflation-adjusted estimates of personal income for states and metropolitan areas, which are being released for the first time as official statistics. Americans looking to move or take a job anywhere in the country can now compare these inflation-adjusted incomes to better understand how their personal income may be affected by a job change or move. In addition, businesses looking to relocate or establish new facilities can use this data to get a comprehensive and consistent measure of differences in the cost of living and the purchasing power of consumers nationwide.

Also for the first time, BEA today released quarterly estimates of the economic activity generated by 22 industries – including manufacturing, construction, finance, transportation, retail, health care, educational services, and the arts. The Gross Domestic Product (GDP) data – one of our government’s most valuable data resources – shows how different industries helped or hindered the U.S. economy’s growth in a given quarter. These new statistics will enable industries in all sectors to better measure their contributions to GDP and understand and identify emerging trends more quickly. This economic intelligence can help make businesses more competitive and innovative, as well as guide their decisions about investing and hiring.

In fact, Ken Simonson, the chief economist at the Associated General Contractors of America, finds that “As construction gradually rebounds from a historic downturn, it is especially useful to have timely estimates of how the sector is contributing to overall economic growth. Having data on all major industries will provide a valuable indicator of where demand for future construction will come from. Getting historical data will help identify possible turning points in growth and interconnections between sectors.”

In addition, David Huether, Senior Vice President of Research at the U.S. Travel Association, states that “By regularly producing Gross Domestic Product by Industry on a quarterly basis, the Bureau of Economic Analysis is taking a historic step forward and proving once again the vital role that the BEA plays in measuring the U.S. economy. For the first time ever, economists, researchers, policy makers and the general public will now be able to understand in a comprehensive fashion how different industries are performing on a high-frequency basis and contributing to our country’s economic output.”

The Commerce Department’s ‘Open for Business Agenda’ prioritizes unleashing more data and making it more accessible so it can catalyze the emergence of new businesses, products, and services. Commerce data enable start-ups, move markets, and power both small and multi-billion dollar companies.

BEA’s new data products are the latest example of how Commerce is working to produce innovative, timely and relevant statistics that serve as a crucial tool for policy-makers at the local, state and national level.