Posts Tagged 'GDP'



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.

GDP Decreases in First Quarter

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.

First-quarter highlights

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).quarter to quarter gdp

Revisions

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.

Corporate profits

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.corporate profits

  • 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.

 

Advance GDP by State Statistics: Widespread But Slower Growth in 2013

GDPbyState_6_11_14

  • Real GDP increased in 49 states in 2013. Leading industry contributors were nondurable-goods manufacturing; real estate and rental and leasing; and agriculture, forestry, fishing, and hunting.
  • Nondurable-goods manufacturing was the largest contributor to U.S. real GDP by state growth in 2013. This industry was the leading contributor to real GDP growth in 10 states, contributing 2.65 percentage points to growth in Louisiana and 1.19 percentage points to growth in Texas.
  • Real estate was the leading contributor to growth in the New England region and contributed 0.50 percentage point or more to growth in North Dakota, Nevada, and Massachusetts.
  • Agriculture, forestry, fishing, and hunting contributed to real GDP growth in 49 states and the District of Columbia.
  • In North Dakota, the fastest growing state in 2013, mining contributed 3.61 percentage points to the state’s 9.7 percent growth in real GDP.
  • In contrast, government subtracted from real GDP growth in six of eight BEA regions, 39 states, and the District of Columbia in 2013.
  • Alaska was the only state where real GDP decreased in 2013, primarily due to a decline in mining.
  • Per capita real GDP ranged from a high of $70,113 in Alaska to a low of $32,421 in Mississippi. Per capita real GDP for the U.S. was $49,115.

Read the full report.