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GDP Q1 Advance Estimate Disappoints at 2.2%

Courtesy of Doug Short.

The Advance Estimate for Q1 GDP came in at 2.2%, down from 3.0% in the previous quarter, which was below most mainstream media estimates. The consensus at Briefing.com was for 2.5%, and Briefing.com’s own estimate was for 2.9%. However, today’s number exactly matched the median and mean of the forecasts of 51 economists who responded to the Wall Street Journal April survey, which I reported on last week.

Here is an excerpt from the Bureau of Economic Analysis news release:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the first quarter of 2012 (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2011, real GDP increased 3.0 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The “second” estimate for the first quarter, based on more complete data, will be released on May 31, 2012.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment and a downturn in nonresidential fixed investment that were partly offset by accelerations in PCE and in exports. [Full Release]

Here is a look at GDP since Q2 1947 together with the real (inflation-adjusted) S&P Composite. The start date is when the BEA began reporting GDP on a quarterly basis. Prior to 1947, GDP was reported annually. To be more precise, what the lower half of the chart shows is the percent change from the preceding period in Real (inflation-adjusted) Gross Domestic Product. I’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER).

 

 

Here is a close-up of GDP alone with a line to illustrate the 3.3 average (arithmetic mean) for the quarterly series since the 1947. I’ve also plotted the 10-year moving average, currently at 1.7. The Advance Estimate for Q1 GDP puts us closer to the moving average.

 

 

Here is the same chart with a linear regression that illustrates the gradual decline in GDP over this timeframe. The latest GDP number is very close to the approximate 2.1 of the regression at the same position on the horizontal axis.

 

 

And for a bit of political trivia in this post-election period, here is a look a GDP by party in control of the White House and Congress.

 

 

In summary, the Q1 GDP Advance Estimate of 2.2% came in below mainstream expectations but on target with the median and mean forecasts of the WSJ survey.

 

 

 

 


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