May 29, 2014

GDP for 1Q revised down

May 30, 2014 – According to a second estimate conducted by the Bureau of Economic Analysis, the economy shrank by 1 percent in the first quarter of 2014. That's a marked decline from the bureau's original estimate of 0.1 percent growth.

NAFCU Senior Economist Curt Long analyzed the new data for a Macro Data Flash. "Severe winter weather and a dip in the volatile inventory segment were the main causes of the contraction, but the expectation is that those transitory factors are behind us," Long commented. "Personal consumption expenditures remained strong, and economic growth should show a solid rebound in the second quarter."

The only positive contribution to GDP was personal consumption expenditures, which increased by 2.1 percent. Negative contributions included private inventories, net exports, nonresidential and residential investment and government spending. Core PCE inflation, excluding food and energy, decreased from 1.3 percent in the fourth quarter to 1.2 percent in the first. Real gross domestic income also decreased by 2.3 percent after an increase of 2.6 percent in the fourth quarter.

The decrease in the first quarter followed a modest increase of 2.6 percent in GDP in the fourth quarter of 2013.