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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (13930)	5/25/2000 9:09:00 AM
From: Justa Werkenstiff	Respond to of 15132

More on the numbers: US 1st-Qtr Gross Domestic Product: Economic Instant Insight Washington, May 25 (Bloomberg) -- Following is a summary of the Commerce Department's second estimate of U.S. gross domestic product for the first quarter: Expected Market Reaction Limited. A 5.4 percent growth rate in U.S. first-quarter gross domestic product -- the same as first estimated though stronger than expected -- is likely to have little effect on Treasury securities. Stronger exports and business investment, which offset a smaller gain in consumer spending, show the economy is still barreling ahead. Stocks could rise on the report's estimate that corporate profits rose in first quarter at the fastest pace in a year. Analysts had expected the gain in first- quarter GDP to be revised lower to a 5.2 percent annual rate. Behind the Numbers Exports rose at a 5.5 percent rate in the first quarter after the previous estimate showed a 0.2 percent drop. Net exports, which include the effect of imports, subtracted 1.1 percent from GDP compared with a 1.3 percent reduction in the first estimate. Non-residential investment, which includes commercial construction and business equipment and software, rose at a 25.2 percent annual rate in the first quarter. That's up from a previous estimate of a 17.3 percent gain. Consumer spending rose at a 7.5 percent annual rate, slower than the 8.3 percent gain first estimated. Still, the increase is the fastest since third-quarter 1985, when spending also rose at a 7.5 percent rate. Inventories and government spending were little changed in the government's revisions. The government releases three estimates of each quarter's GDP as more information becomes available to its analysts. The final estimate will be released June 29. Real final sales -- which excludes inventories -- grew at a 6.9 percent annual rate, the same as previously reported. After-tax corporate profits, reported for the first time today, rose 4 percent in the first quarter after rising 2.7 percent during the fourth quarter, according to the Commerce Department's statistics. The first-quarter gain was the largest since a 7.4 percent increase in the first quarter of last year. The GDP deflator, a broad measure of inflation tied to the report, rose at a 2.7 percent annual rate in the first quarter, the same as previously estimated. The personal consumption expenditures price index, a measure of inflation watched by Federal Reserve policy-makers and tied to consumer spending, rose at a 3.1 percent annual rate, down from the first estimate of a 3.2 percent increase. What Experts Say ``There is precious little evidence in the economic data of a slowdown although the last two months of retail sales did show a moderation,'' said Paul Kasriel, an economist at the Northern Trust Co., in Chicago. Previous Market Reaction After the government's last GDP estimate was released on April 27, the yield on the U.S. Treasury's 10-year note rose 9 basis points to 6.22 percent after a Labor Department report showed labor costs accelerated. The implied yield on the federal funds futures contract for June delivery, an indicator of expectations for future Federal Reserve interest rate actions, increased 8 basis points to 6.41 percent. Market Performance Since reaching a recent low of 5.77 percent on April 10, the yield on the 10-year Treasury note has risen on expectations Federal Reserve policy-makers will keep raising interest rates to cool the economy and prevent an outbreak of inflation. Earlier today, the yield on the note rose 2 basis points to 6.49 percent, after rising 3 basis points yesterday. The implied yield on the federal funds futures contract for July has ranged between 6.38 percent and 6.81 percent since the end of March. Yesterday, the implied yield on the July futures was unchanged at 6.75 percent. May/25/2000 8:30 ET