US GDP Growth Slows to 0.5% in Q1


The US economy expanded an annualized 0.5 percent on quarter in the first three months of 2016, lower than a 1.4 percent expansion in the previous period, and below market expectations of 0.7 percent growth, according to the advanced estimate released by the Bureau of Economic Analysis. It is the weakest performance since the first quarter of 2014 when the economy contracted 0.9 percent as consumer spending slowed, the drag from trade and business inventories worsened and business investment fell for the third straight quarter.

Personal consumption expenditure (PCE) contributed 1.27 percentage points to growth (1.66 percent in the previous quarter) and rose 1.9 percent (2.4 percent in the previous quarter). Spending on durable goods (-1.6 percent from 3.8 percent in the previous quarter) fell, services slowed (2.7 percent from 3.8 percent in the previous period) and nondurable goods expenditure increased at a faster 1 percent (0.6 percent in the previous quarter). 

Fixed investment subtracted 0.27 percentage points to growth (0.06 percent in the previous quarter) and fell 1.6 percent (+0.4 percent in the previous quarter). Nonresidential investment shrank 5.9 percent (-2.1 percent in the previous quarter): structures fell 10.7 percent (-5.1 percent in the previous quarter), equipment investment decreased 8.6 percent (-2.1 percent in the previous quarter) while investment in intellectual property products grew 1.7 percent (rebounding from a 0.2 percent decline in the previous quarter). Residential investment jumped 14.8 percent, higher than 10.1 percent in the previous quarter. 

Private inventories subtracted 0.33 percentage points from the growth, compared to a 0.22 percentage point’s decrease in the previous period. Businesses accumulated $60.9 billion worth of inventory, lower than $78.3 billion earlier reported. 

Meanwhile, exports shrank 2.6 percent (-2 percent in the previous quarter) while imports edged up 0.2 percent (recovering from a 0.7 percent fall in the previous quarter), bringing the impact from trade to -0.34 percent from -0.14 percentage points in the previous quarter.

Government spending and investment added 0.2 percentage points to growth compared to a 0.02 percentage points in the previous quarter, up 1.2 percent from the fourth quarter.


US GDP Growth Slows to 0.5% in Q1


BEA | Joana Taborda | joana.taborda@tradingeconomics.com
4/28/2016 1:58:52 PM