US Economy Contracts 1% in Q1


United States GDP shrank at an annual rate of 1.0 percent in the first quarter of 2014, according to the second estimate released by the Commerce Department. It is the worst performance in three years and comes lower than a preliminary estimated 0.1 percent expansion, due to a sharper fall in private inventory investment and a bigger trade deficit.

The downturn in the percent change in real GDP primarily reflected a downturn in exports, a larger decrease in private inventory investment, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.3 percent in the first quarter, 0.1 percentage point less than in the advance estimate; this index increased 1.5 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in the first quarter, compared with an increase of 1.8 percent in the fourth.

Real personal consumption expenditures increased 3.1 percent in the first quarter, compared with an increase of 3.3 percent in the fourth. Durable goods increased 1.4 percent, compared with an increase of 2.8 percent.  Nondurable goods increased 0.4 percent, compared with an increase of 2.9 percent. Services increased 4.3 percent, compared with an increase of 3.5 percent.

Real nonresidential fixed investment decreased 1.6 percent in the first quarter, in contrast to an increase of 5.7 percent in the fourth. Investment in nonresidential structures decreased 7.5 percent, compared with a decrease of 1.8 percent.  Investment in equipment decreased 3.1 percent, in contrast to an increase of 10.9 percent.  Investment in intellectual property products increased 5.1 percent, compared with an increase of 4.0 percent.  Real residential fixed investment decreased 5.0 percent, compared with a decrease of 7.9 percent.

Real exports of goods and services decreased 6.0 percent in the first quarter, in contrast to an increase of 9.5 percent in the fourth. Real imports of goods and services increased 0.7 percent, compared with an increase of 1.5 percent.

Real federal government consumption expenditures and gross investment increased 0.7 percent in the first quarter, in contrast to a decrease of 12.8 percent in the fourth. National defense decreased 2.4 percent, compared with a decrease of 14.4 percent.  Nondefense increased 5.9 percent, in contrast to a decrease of 10.0 percent.  Real state and local government consumption expenditures and gross investment decreased 1.8 percent in the first quarter; it was unchanged in the fourth.

The change in real private inventories subtracted 1.62 percentage points from the first-quarter change in real GDP, after subtracting 0.02 percentage point from the fourth-quarter change. Private businesses increased inventories $49.0 billion in the first quarter, following increases of $111.7 billion in the fourth quarter and $115.7 billion in the third.

US Economy Contracts 1% in Q1


U.S. Commerce Department | Joana Taborda | joana.taborda@tradingeconomics.com
5/30/2014 3:25:26 PM