Real gross domestic product (GDP) decreased 2.9 percent in the first quarter of 2014, according to the “third” estimate released today by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 percent.
The decline in real GDP was largely accounted for by significant declines in nonfarm inventory investment and in net exports.
In addition, state and local government spending, business investment, and housing investment also contributed to the real GDP decline.
In contrast, consumer spending increased, notably in services (mainly home utilities).
The first-quarter real GDP growth rate was revised down 1.9 percentage points from the second estimate released in May, based on newly available source data.
- Consumer spending was revised down, primarily reflecting a downward revision to services, mainly to health care.
- Exports of goods were revised down, reflecting revisions to industrial supplies and materials and to foods, feeds, and beverages. Exports of services were also revised down.
- Imports of goods were revised up, mainly non-auto capital goods as well as vehicles, engines, and parts. Imports of services were also revised up, mainly travel services.
BEA’s featured measure of corporate profits declined 9.1 percent at a quarterly rate in the first quarter, after increasing 2.2 percent in the previous quarter, according to updated estimates. The decline was the largest since the fourth quarter of 2008.
- Profits of nonfinancial corporations fell 8.0 percent after rising 1.5 percent.
- Profits of financial corporations fell 15.1 percent after rising 1.3 percent.
- Profits from the rest of the world fell 5.8 percent after rising 5.5 percent.
Over the last 4 quarters, corporate profits fell 2.2 percent.
State personal income increased 0.8 percent on average in the first quarter of 2014, an acceleration from the 0.5 percent growth in the fourth quarter of 2013. Personal income grew in 46 states and growth accelerated in 24 of those states. The fastest growth, 1.4 percent, was in Washington state, Vermont, and West Virginia. Personal income fell 2.9 percent in North Dakota, 0.3 percent in South Dakota, and 0.2 percent in Arkansas and Nebraska. Inflation, as measured by the national price index for personal consumption expenditures, was 0.3 percent in the first quarter, the same as in the fourth quarter.
The U.S. current-account deficit—a net measure of transactions between the United States and the rest of the world in goods, services, primary income (investment income and compensation), and secondary income (current transfers)—increased to $111.2 billion (preliminary) in the first quarter of 2014 from $87.3 billion (revised) in the fourth quarter of 2013. As a percent of current-dollar GDP, the deficit increased to 2.6 percent from 2.0 percent. The previously published current-account deficit for the fourth quarter was $81.1 billion.
- The deficit on international trade in goods increased to $182.3 billion from $169.1 billion as goods exports decreased and goods imports increased.
- The surplus on international trade in services decreased to $55.5 billion from $56.6 billion as services exports decreased and services imports increased.
- The surplus on primary income decreased to $46.7 billion from $54.6 billion as primary income receipts decreased and primary income payments increased.
- The deficit on secondary income (current transfers) increased to $31.0 billion from $29.5 billion as secondary income receipts decreased and secondary income payments increased.
Net borrowing from financial-account transactions were $77.5 billion in the first quarter, down from $143.5 billion in the fourth.
- Net U.S. acquisition of financial assets excluding financial derivatives was $144.9 billion in the first quarter, down from $195.5 billion in the fourth.
- Net U.S. incurrence of liabilities excluding financial derivatives was $229.8 billion in the first quarter, down from $341.8 billion in the fourth.
- Net transactions in financial derivatives were $7.5 billion in the first quarter after net transactions of $2.9 billion in the fourth.
For more, read the full report.