June 30, 2017

1Q17 Gross Domestic Product, Third Estimate: An Annualized 1.4 Percent, Up From Previous 1.2 Percent Estimate and 0.7 Percent Originally Reported

Filed under: Economy,Taxes & Government — Tom @ 9:05 am

From the Bureau of Economic Analysis:

Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2017 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.2 percent.

With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated, but the general picture of economic growth remains the same (see “Updates to GDP” on page 2).

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

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

Current-dollar GDP increased 3.4 percent, or $157.7 billion, in the first quarter to a level of $19,027.1 billion. In the fourth quarter, current-dollar GDP increased 4.2 percent, or $194.1 billion (table 1 and table 3).

The price index for gross domestic purchases increased 2.5 percent in the first quarter, compared with an increase of 2.0 percent in the fourth quarter (table 4). The PCE price index increased 2.4 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 2.0 percent, compared with an increase of 1.3 percent (appendix table A).

Updates to GDP

The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE and to exports which were partly offset by a downward revision to nonresidential fixed investment. For more information, see the Technical Note. For information on updates to GDP, see the “Additional Information” section that follows.

The updated chart will appear shortly.



The only change above 0.1 points was in health care, which, as it has during almost the entire Obamacare era, has disproportionately taken up more and more of GDP without (in my opinion) meaningfully affected living standards.

The major news from the first quarter is the 1.23-point contribution of fixed nonresidential, i.e., business, investment. It’s the highest quarterly contribution since the fourth quarter of 2013, and if sustained for a year, would be the highest contribution since 2000. Obviously, the question is whether it can be sustained. But it’s a start.



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