1st quarter GDP number

The BEA report this morning that the GDP fell by 6.1% in the 1st quarter of 2009 is not as bad as it seems. Yes, the drop was greater than the 4.6% decline predicted by the Dow Jones Newswires survey of economist. But there are some interesting bits of good news in the data. The main one is that personal consumption actual rose (by an annualized rate of 1.5% 2.2% – contributing a positive 1.5% to the change in GDP) after two quarters of decline. The real killer was a large decrease in private domestic investment, especially fixed non-residential (i.e. business spending). Inventories also declined sharply. Revived consumer demand and low inventories adds up to a potential rebound in business spending.
Also note that this is the “advance” version of the data — which will be revised as more data (such as the March trade figures) become available. The advance GDP usually gives a good indication of the direction and relative size of the changes to GDP, but the actual number will change.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s