Q1 GDP: 3.2%

Economists had expected GDP of 3.3%, so the headline is a little lite, but it’s basically in line and will be subject to plenty of revisions.

Consumption grew 3.6%, so that’s good news.

But, this is well off the pace — totally as expected — from the 5.6% reading in Q4. That was helped by the inventory spending.

The stock market isn’t budging much on the news, suggesting this isn’t hardly a miss.

Here’s the full announcement:

———

Real gross domestic product — the output of goods and services produced by labour and property
located in the United States — increased at an annual rate of 3.2 per cent in the first quarter of 2010,
(that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by
the Bureau of Economic Analysis.  In the fourth quarter, real GDP increased 5.6 per cent.

      The Bureau emphasised that the first-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see the box on page 3).  The
“second” estimate for the first quarter, based on more complete data, will be released on May 27, 2010.

      The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential
fixed investment that were partly offset by decreases in state and local government spending and in
residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased.

      The deceleration in real GDP in the first quarter primarily reflected decelerations in private
inventory investment and in exports, a downturn in residential fixed investment, and a larger decrease in
state and local government spending that were partly offset by an acceleration in PCE and a deceleration
in imports.

      Motor vehicle output added 0.52 percentage point to the first-quarter change in real GDP after
adding 0.45 percentage point to the fourth-quarter change.  Final sales of computers added 0.19
percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the fourth-
quarter change.

__________________________
      FOOTNOTE.–Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified.  Quarter-to-quarter dollar changes are differences between these published estimates.  per cent
changes are calculated from unrounded data and are annualized.  “Real” estimates are in chained (2005)
dollars.  Price indexes are chain-type measures.

      This news release is available on BEA’s Web site along with the Technical Note and Highlights
related to this release.
__________________________

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.7 per cent in the first quarter, compared with an increase of 2.0 per cent in the fourth.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 per cent in
the first quarter, compared with an increase of 1.5 per cent in the fourth.  The federal pay raise for
civilian and military personnel added 0.2 percentage point to the change in the first-quarter gross
domestic purchases price index.

      Real personal consumption expenditures increased 3.6 per cent in the first quarter, compared with
an increase of 1.6 per cent in the fourth.  Durable goods increased 11.3 per cent, compared with an
increase of 0.4 per cent.  Nondurable goods increased 3.9 per cent, compared with an increase of 4.0
per cent.  Services increased 2.4 per cent, compared with an increase of 1.0 per cent.

      Real nonresidential fixed investment increased 4.1 per cent in the first quarter, compared with an
increase of 5.3 per cent in the fourth.  Nonresidential structures decreased 14.0 per cent, compared with a
decrease of 18.0 per cent.  Equipment and software increased 13.4 per cent, compared with an increase of
19.0 per cent.  Real residential fixed investment decreased 10.9 per cent, in contrast to an increase of 3.8
per cent.

      Real exports of goods and services increased 5.8 per cent in the first quarter, compared with an
increase of 22.8 per cent in the fourth.  Real imports of goods and services increased 8.9 per cent,
compared with an increase of 15.8 per cent.

      Real federal government consumption expenditures and gross investment increased 1.4 per cent
in the first quarter, compared with no change in the fourth.  National defence increased 1.2 per cent, in
contrast to a decrease of 3.6 per cent.  Nondefense increased 1.7 per cent, compared with an increase of
8.3 per cent.  Real state and local government consumption expenditures and gross investment decreased
3.8 per cent, compared with a decrease of 2.2 per cent.

      The change in real private inventories added 1.57 percentage points to the first-quarter change in
real GDP after adding 3.79 percentage points to the fourth-quarter change.  Private businesses increased
inventories $31.1 billion in the first quarter, following decreases of $19.7 billion in the fourth quarter
and $139.2 billion in the third.

      Real final sales of domestic product — GDP less change in private inventories — increased 1.6
per cent in the first quarter, compared with an increase of 1.7 per cent in the fourth.

Gross domestic purchases

      Real gross domestic purchases — purchases by U.S. residents of goods and services wherever
produced — increased 3.8 per cent in the first quarter, compared with an increase of 5.2 per cent in the
fourth.

Disposition of personal income

      Current-dollar personal income increased $115.1 billion (3.9 per cent) in the first quarter,
compared with an increase of $92.5 billion (3.1 per cent) in the fourth.

      Personal current taxes increased $73.3 billion in the first quarter, in contrast to a decrease
      of $1.9 billion in the fourth.

      Disposable personal income increased $41.7 billion (1.5 per cent) in the first quarter, compared
with an increase of $94.4 billion (3.5 per cent) in the fourth.  Real disposable personal income was
unchanged in the first quarter, compared with an increase of 1.0 per cent.

      Personal outlays increased $130.4 billion (5.0 per cent) in the first quarter, compared with an
increase of $96.5 billion (3.7 per cent) in the fourth.  Personal saving — disposable personal income less
personal outlays — was $340.8 billion in the first quarter, compared with $429.3 billion in the fourth.
The personal saving rate — saving as a percentage of disposable personal income — was 3.1 per cent in
the first quarter, compared with 3.9 per cent in the fourth.  For a comparison of personal saving in BEA’s
national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds
accounts and data on changes in net worth, go to http://www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Current-dollar GDP

      Current-dollar GDP — the market value of the nation’s output of goods and services — increased
4.1 per cent, or $147.6 billion, in the first quarter to a level of $14,601.4 billion.  In the fourth quarter,
current-dollar GDP increased 6.1 per cent, or $211.7 billion.

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