AMERICA’S economy performed just a little worse in the first quarter of 2010 than the Bureau of Economic Analysis previously estimated. Economists were expecting a slight upward revision to growth in the BEA’s second estimate of first quarter GDP, from the initial 3.2% expansion to 3.4%. Instead, growth was nudged downward, to 3.0%. The American economy expanded in the fourth quarter of 2009 by 5.6%.
As disappointing as the downward revision is the source of the changes to the estimate. Key growth components like personal consumption and spending on business equipment contributed less to the first quarter performance than originally estimated. This was partially offset by a better than initially reported number for inventory investment. Inventory changes typically boost output figures early in recovery but are not a source of sustainable GDP growth. Both imports and exports were revised upward, making for a wash for net growth.