Q1 2010 GDP has again been revised downward to 2.7%. The 2nd GDP estimate for Q1 2010 was 3.0%. Here is the Q1 2010 advance GDP estimate, where GDP was reported 3.2%. From the 3rd revision report, as in the 2nd, consumer spending (PCE) dropped from it's initial estimate and the trade deficit widened. A whopping 0.5% reduction from the initial GDP estimate has occurred, caused by grossly overestimating consumer spending and underestimating the trade deficit. While people rail on government spending, realize State and Local Government spending subtracted almost half a percent (-0.48) off of Q1 2010 GDP.
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.
So, what changed? Here are Q1 2010, 3rd estimate breakdown of GDP percentage:
- C = +2.13
- I = +1.82
- G = -0.39
- X = +1.27
- M = -2.09
Below is Q1 2010, 2nd estimate breakdown of GDP percentage:
- C = +2.42
- I = +1.66
- G = -0.40
- X = +0.82
- M = -1.48
Below is the change between the Q1 2nd and Q1 2010 3rd revisions:
- C = -0.29
- I = +0.16
- G = +0.01
- X = +0.45
- M = -0.61
In the first revision for Q1 20910, those numbers, which make up the total GDP percentage growth were:
- C = +2.55
- I = +1.67
- G = -0.37
- X = +0.66
- M = -1.28
Below is the change between the Q1 advance and Q1 2010 3rd revision:
- C = -0.42
- I = +0.15
- G = -0.02
- X = +0.61
- M = -0.81
From the report the Q1 2010 GDP component percentage changes, along with some sub-components from Q4 2009 GDP. They do not list I total, which had 16.3% growth from Q4 2009, due to inventories rate changes.
Real personal consumption expenditures (C) increased 3.0 percent in the first quarter, compared with an increase of 1.6 percent in the fourth. Real nonresidential fixed investment increased 2.2 percent, compared with an increase of 5.3 percent. Nonresidential structures decreased 15.5 percent, compared with a decrease of 18.0 percent. Equipment and software increased 11.4 percent, compared with an increase of 19.0 percent. Real residential fixed investment decreased 10.3 percent, in contrast to an increase of 3.8 percent.
Real exports of goods and services (X) increased 11.3 percent in the first quarter, compared with an increase of 22.8 percent in the fourth. Real imports of goods and services (M) increased 14.8 percent, compared with an increase of 15.8 percent.
Real federal government consumption expenditures and gross investment (G) increased 1.2 percent in the first quarter, compared with no change in the fourth. National defense increased 1.0 percent, in contrast to a decrease of 3.6 percent. Nondefense increased 1.5 percent, compared with an increase of 8.3 percent. Real state and local government consumption expenditures and gross investment decreased 3.8 percent, compared with a decrease of 2.2 percent.
The change in real private inventories added 1.88 percentage points to the first-quarter change in real GDP, after adding 3.79 percentage points to the fourth-quarter change. Private businesses increased inventories $41.2 billion in the first quarter, following decreases of $19.7 billion in the fourth quarter and $139.2 billion in the third.
The trade deficit widened to -0.82% of the percentage contribution of GDP from -0.66% second revision and the first estimate on the trade deficit was -0.62%.
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.
As in the advance and 2nd revision GDP report, C, or consumption (PCE), which reflects demand, dropped from the initial estimate but is still a driving force of positive GDP growth.
A main change was in investments again, attributable to changes in private inventories. Fixed non-residential investment also was negative -0.6 of the total 2.7% GDP. Residential investment was a -0.27.
Note the changes in inventories accounted for 1.88 of the 2.7% change in GDP. In the 2nd revision inventories was 1.65 of GDP, up from in 1.57 in the first estimate. Inventory changes are now 69% of GDP growth for Q1 2010!
The report gives some details on real GDP contributions.
Motor vehicle output added 0.40 percentage point to the first-quarter change in real GDP after adding 0.45 percentage point to the fourth-quarter change. Final sales of computers added 0.09 percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the fourth-quarter change.
Structures are office buildings, investment in consumer places, hotels and so on and took away -1.17 from Q1 2010 GDP. Fixed private investment declined -0.5% from last quarter.
Personal savings was revised to 3.5% of personal income.
Corporate profits were revised to 8.0%, up 34% for the year.
The price index on consumer purchases increased 1.7% for Q1 2010.
The BEA website on GDP is here. In July GDP will be revised all the way back to 2007. The BEA needs better raw data collection methods (obviously).