Wednesday, April 29, 2009

GDP Down 6.1%

From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.

The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, private inventory investment, equipment and software, nonresidential structures, and residential fixed investment that were partly offset by a positive contribution from personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, decreased.

The slightly smaller decrease in real GDP in the first quarter than in the fourth reflected an upturn in PCE for durable and nondurable goods and a larger decrease in imports that were mostly offset by larger decreases in private inventory investment and in nonresidential structures and a downturn in federal government spending.

Motor vehicle output subtracted 1.36 percentage points from the first-quarter change in real GDP after subtracting 2.01 percentage points from the fourth-quarter change. Final sales of computers added 0.05 percentage point to the first-quarter change in real GDP after subtracting 0.02 percentage point from the fourth-quarter change.

Let's look at some charts from the data:

Click for a larger image

This charts tells us that since 4Q07 there has only been one quarter where growth was over 2%. But looking at a longer time period, since the 3Q06 there have been only three quarters where growth was over 2%. That means that only 27% of the last 11 quarters have had a solid rate of growth.

Personal consumption expenditures bounced back despite the consumer being under serious strain from falling stock and real estate prices and a very weak job market. The main reason was

A 9.1% increase from the preceding quarter in consumer's purchases of durable goods. Also note the nondurable goods -- which were down in the preceding quarters -- were up was well.

Gross Private Domestic Invesment cratered last quarter. Actually --

All the subcategories of domestic investment cratered. Notice the incredibly large drop in non-residential structures.

Finally, imports and exports both dropped like stones as well.

Here's the bottom line:

1.) Overall, growth has been weak for 8 of the last 11 quarters.

2.) The consumer actually bounced back thanks to an increase in durable goods purchases. Frankly, I'm pretty shocked by this development.

3.) Gross investment dropped like a stone across all major categories.

4.) Imports and exports dropped hard and fast as well.