Real gross domestic product (GDP) decreased 1.0 percent in the first quarter of 2014, according to the “second” estimate released today by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 percent.
First-quarter GDP highlights
The decline in real GDP was more than accounted for by a significant decline in inventory investment, notably by motor vehicle dealerships. In fact, GDP less inventory investment (real final sales of domestic product) rose 0.6 percent in the first quarter.
Declines in exports, in business investment, in state and local government spending, and in housing investment also contributed to the decrease in first-quarter real GDP.
In contrast, consumer spending increased, notably in health care and in home utilities.
First-quarter real GDP growth was revised down 1.1 percentage points from the advance estimate released in April, based on newly available source data.
- Inventory investment was revised down, mainly in retail trade, in manufacturing, and in mining, utilities, and construction.
- Imports were revised up, notably in foods, feeds, and beverages and in petroleum and related products. Partly offsetting this revision, exports were also revised up, notably in nonautomotive capital goods and in automotive vehicles, engines, and parts.
BEA’s featured measure of corporate profits declined 9.8 percent in the first quarter, after increasing 2.2 percent in the previous quarter. The decline was the largest since the fourth quarter of 2008.
- Profits of nonfinancial corporations fell 8.1 percent after rising 1.5 percent.
- Profits of financial corporations fell 15.0 percent after rising 1.3 percent.
- Profits from the rest of the world fell 9.1 percent after rising 5.5 percent.
Over the last 4 quarters, corporate profits fell 3.0 percent.
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The U.S. monthly international trade deficit decreased in March 2014 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $41.9 billion in February (revised) to $40.4 billion in March as exports increased more than imports. The previously published February deficit was $42.3 billion. The goods deficit decreased $0.6 billion from February to $60.7 billion in March; the services surplus increased $0.9 billion from February to $20.4 billion in March.
Exports of goods and services increased $3.9 billion in March to $193.9 billion, mainly reflecting an increase in exports of goods. Exports of services also increased.
- The increase in exports of goods mostly reflected increases in capital goods, in industrial supplies and materials, and in automotive vehicles, parts, and engines. Partly offsetting these increases was a decrease in consumer goods.
- The increase in exports of services mostly reflected increases in other private services, which includes items such as business, professional, and technical services, insurance services, and financial services, and in passenger fares. Partly offsetting these increases was a decrease in travel.
Imports of goods and services increased $2.5 billion in March to $234.3 billion, reflecting an increase in imports of goods. Imports of services decreased.
- The increase in imports of goods was more than accounted for by increases in consumer goods, in foods, feeds, and beverages, in capital goods, and in other goods. Partly offsetting these increases was a decrease in industrial supplies and materials.
- The decrease in imports of services was mainly accounted for by a decrease in royalties and license fees, which in February included payments for the rights to broadcast the 2014 Winter Olympic Games.
Goods by geographic area (not seasonally adjusted)
- The goods deficit with the European Union increased from $9.1 billion in February to $11.5 billion in March. Exports increased $3.6 billion to $24.6 billion, and imports increased $6.0 billion to $36.1 billion.
- The goods deficit with China decreased from $20.9 billion in February to $20.4 billion in March. Exports increased $1.0 billion to $10.8 billion, and imports increased $0.5 billion to $31.2 billion.
- The goods deficit with Mexico increased from $4.0 billion in February to $5.1 billion in March. Exports increased $1.5 billion to $19.9 billion, and imports increased $2.6 billion to $25.0 billion.
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Personal income increased 0.5 percent in March after increasing 0.4 percent in February. Wages and salaries, the largest component of personal income, increased 0.6 percent after increasing 0.3 percent.
Current-dollar disposable personal income (DPI), after-tax income, increased 0.5 percent in March after increasing 0.4 percent in February.
Real DPI, income adjusted for taxes and inflation, increased 0.3 percent in March, the same increase as in February.
Real consumer spending, spending adjusted for price changes, increased 0.7 percent in March after increasing 0.4 percent in February. Spending on durable goods increased 2.7 percent after increasing 1.3 percent. Purchases of motor vehicles and parts accounted for more than half of the March increase.
PCE prices increased 0.2 percent in March after increasing 0.1 percent in February. Excluding food and energy, PCE prices rose 0.2 percent in March.
Personal saving rate
Personal saving as a percent of DPI was 3.8 percent in March and 4.2 percent in February.
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