The Bureau of Economic Analysis (BEA) released its third estimate of real GDP growth for the first quarter of 2013 based on more complete data than was available for the earlier estimates. First quarter growth was revised down to a 1.8% annual rate from 2.4% in the second estimate. The reduction was concentrated primarily in personal consumption expenditures (PCE) which grew at a 2.6% annual rate instead of 3.4%, but also exports which contracted at a 1.1% annual rate rather than expanding at 0.8% as previously estimated. Real GDP grew at an annual rate of 0.4% in the fourth quarter of 2012.
The advance estimate of 2.5% GDP growth in the first quarter was greeted with a collective sigh of relief, beating expectations that the end of the payroll tax reduction coupled with increased taxes on high incomes plus any anticipatory sequestration impacts would be a significant drag on growth. Today’s estimate of 1.8% growth suggests we may not have dodged that bullet completely. Growth in the second quarter is expected to have weakened from the first quarter. We’ll see on July 31 when the advance estimate of second quarter growth is released (and then again on August 29 when it’s revised and again on September 26 when it’s revised again). Feel lucky?