3rd GDP estimate shows 2.9% decline 1Q
June 26, 2014 – The Bureau of Economic Analysis’ third estimate of the U.S. gross domestic product showed that it shrank by 2.9 percent in the first quarter of 2014, which is the largest quarterly contraction in five years.
NAFCU Senior Economist Curt Long analyzed the data for a Macro Data Flash, and found that the main reason for the downgrade was that healthcare spending was less than previously estimated.
Residential investment decreased in the first quarter by 4.2 percent, and nonresidential investment decreased by 1.2 percent. Personal consumption was the only component with an increase in the first quarter but that growth was revised downward to just 1.0 percent.
“The weakness in GDP was concentrated in the first two months of the year during the severe winter weather,” Long wrote. “The economy is expected to improve throughout the year as the labor market improves and pent-up demand is released.”
Core PCE (personal consumption expenditures) inflation, excluding food and energy – which is the Federal Reserve’s key inflation metric – went down from 1.3 percent in the fourth quarter of 2013 to 1.2 percent in the first quarter of 2014. Overall PCE inflation went up from 1.1 percent to 1.4 percent.
NAFCU Macro Data Flash