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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Real gross domestic product (GDP) increased 0.1 percent in the first quarter of 2014, according to the “advance” estimate released today by the Bureau of Economic Analysis. In the fourth quarter of 2013, the growth rate was 2.6 percent.
First-quarter GDP highlights
The slowdown in real GDP growth reflected:
- A downturn in exports. Exports of industrial supplies and materials as well as foods, feeds, and beverages declined after increasing in the fourth quarter.
- A downturn in business investment. Spending on transportation equipment fell after rising significantly in the fourth quarter. Spending on computers and peripherals also turned down.
- A larger decrease in inventory investment. Inventory investment by retail trade companies (mainly motor vehicles dealers) declined significantly after an increase in the fourth quarter.
- A slowdown in consumer spending, mainly in nondurable goods, notably clothing and footwear as well as food and beverages. These movements were partly offset by faster growth in utilities and healthcare.
In contrast, federal government spending turned up, and imports declined after increasing in the fourth quarter.
Personal income and personal saving
Real disposable personal income (DPI)–personal income adjusted for inflation and taxes–increased 1.9 percent in the first quarter, compared with 0.8 percent in the fourth quarter of 2013. Personal saving as a percent of current -dollar DPI was 4.1 percent, compared with 4.3 percent.
Prices of goods and services bought by U.S. residents rose 1.4 percent in the first quarter, after rising 1.5 percent in the fourth quarter of 2013.
Both energy prices and food prices turned up.
Excluding food and energy, prices increased 1.4 percent in the first quarter after rising 1.8 percent in the fourth quarter.
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