U.S. GDP up 1.9% in first quarter, revised lower 05/31 08:52 AM WASHINGTON (MarketWatch) -- The U.S. economy ran into a deeper soft patch in the first quarter than initially estimated, a government report showed on Thursday.
The Commerce Department estimated that the economy grew at a 1.9% pace in the first quarter, slower than the 2.2% rate initially reported.
This is down from a 3.0% growth rate of real gross domestic product, the output of goods and services produced in the U.S., in the fourth quarter.
The figures are seasonally adjusted and adjusted for price changes. The revisions come from more complete data than was available at the first estimate.
Economists surveyed by MarketWatch had been expecting a downward revision to a 1.8% rate.
Economists are forecasting slightly stronger growth -- about 2.2% on an annualized basis -- in the second quarter ending June 30. The economy is slowly improving, analysts said, but remains held back by too much consumer indebtedness.
"As has been true throughout the recovery to date, the current expansion is neither as robust as optimists may hope nor as vulnerable as pessimists may fear," said economists at Royal Bank of Scotland ahead of the GDP report.
In a separate report, the Labor Department said initial claims for jobless benefits rose to the highest level in five weeks.
Treasury prices extended gains and the dollar remained under pressure after the data were released.
Details
The revisions to first-quarter GDP were in three major areas: lower inventory building, a wider trade gap, and weakness to state and local government spending. See full government report.
One negative surprise was that consumer spending was also downwardly revised.
Another negative aspect to the report was a downward revision to wage and salary growth in the final three months of 2011.
Real disposable personal income is now estimated to have increased a slim 0.2% in the fourth quarter, down from the prior estimate of 1.7%. Economists had been cheered by the strong income gain late last year.
In this quarter, real disposable income rose 0.4%, unrevised from the initial estimate.
Final sales increased at a 1.7% annual pace, revised from 1.6%. Gross domestic purchases -- sales to U.S. residents -- rose at a 1.9% annual rate, revised down from 2.1%.
Corporate profits before tax rose 13.2% in the quarter, compared to a 0.4% decline in the fourth quarter. Over the past year, corporate profits were up 14.9%.
Inventories increased a revised $57.7 billion in the first quarter compared to the prior estimate of $69.5 billion.
Economists believe that weaker inventory growth is actually a positive for the second quarter.
Consumer spending rose 2.7% in the first quarter, down from the prior estimate of a 2.9% gain. Still, consumer spending added just under two percentage points to GDP.
Spending on durable goods rose 14.3%
Consumer spending on nondurable goods rose 2.3%. Spending on services increased 1.0%.
State and local government spending fell a revised 2.5% in the first quarter, more than double the initial estimate of a 1.2% decline.
A key measure of inflation, the personal consumption expenditure price index, rose a revised 2.5%, compared with the initial estimate of a 2.4% gain.
In current dollar terms, GDP rose 3.6% to an annual rate of $15.45 trillion. |
