A 1st estimate of Q1 2010 GDP was released Friday and the advanced report is 3.2%. Here is the Q4 2009 GDP estimate. In the initial report, consumer spending (PCE) more than doubled in it's GDP contribution from Q4 2009.
As a reminder, GDP is made up of:
Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports, X=Exports, M=Imports.
In the first revision for Q1 20910, those numbers, which make up the total GDP percentage growth are:
- C = +2.55
- I = +1.67
- G = -0.37
- X = +0.66
- M = -1.28
So, what changed? Here are Q4 2009, 3rd estimate breakdown of GDP percentage:
- C = +1.16
- I = +4.39
- G = -0.26
- X = +2.36
- M = -2.09
From the report:
The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, and a larger decrease in state and local government spending that were partly offset by an acceleration in PCE and a deceleration in imports.
So, as we can see the C, or consumption (PCE), which reflects demand, increased dramatically. The personal savings rate dropped to 3.1%, down from 3.9% last quarter. A main change was in investments again, attributable to changes in private inventories. Fixed non-residential investment also was only 0.10 of the total 3.2% GDP, which reflects weak future growth, but most of that was in residential, down 10.9% from last quarter. Structures, which includes Commercial Real Estate, dropped 14% from Q4 2009. Note that changes in inventories accounted for 1.57, or almost half of the total 3.2% GDP growth.
The price index was also changed from 1.7% in Q1 2010. (paid more means bought less in quantity).
On imports and exports we see the a strange growth implosion on U.S. exports and numbers which imply a slow down in global trade, as well as increased the U.S. trade deficit. From the report, comparing Q4 2009 vs. Q1 2010:
Real exports of goods and services increased 5.8 percent in the first quarter, compared with an increase of 22.8 percent in the fourth. Real imports of goods and services increased 8.9 percent, compared with an increase of 15.8 percent.
The below graph is the change, quarterly, of real imports vs. exports. As we can see, there is a sudden drop in U.S. exports that goes against the grain of recovery.
So, what does this all mean? Signs of life on the economy but fairly lukewarm. One can say the U.S. consumer is back from the dead, but it appears that consumption is coming at the cost of personal savings.