First Quarter GDP Revised Up, But Trend Is Still Down

The US Bureau of Economic Analysis (BEA) released the second estimate of US real gross domestic product (GDP) growth for the first quarter of 2016 (Exhibit 1). Real GDP grew at a seasonally adjusted annual rate of 0.8 percent, which is higher than the previously released advance estimate of 0.5 percent.

Exhibit 1: US Real Gross Domestic Product (GDP), Seasonally Adjusted Annual RateGDP Exhibit 1

The BEA noted that positive contributions to growth included personal consumption expenditures, residential fixed investment, state and local government spending, and negative import growth. On the other hand, negative contributions to growth included nonresidential fixed investment, private inventory investment, federal government spending, and negative export growth.

Real GDP has been on a downward trend since the second quarter of 2015 (growth: 3.9%), a result of slower or negative growth in personal consumption spending, private investment, and exports.

It is important to note that although overall private investment has dropped, residential fixed investment growth has accelerated. The residential fixed investment component of GDP grew at a seasonally adjusted annual rate of 17.1 percent in the first quarter, up from 10.1 percent in the fourth quarter of 2015. This GDP component includes the construction of new single-family and multifamily units, remodeling, and other activities related to housing. Exhibit 2 highlights the growth of this component.

Exhibit 2: Contributions to Real GDP Growth by Component GDP Exhibit 2v4



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