By Susan A. Baird
PBN Web Editor
WASHINGTON – The U.S. economy grew at an annual pace of 0.6 percent in the first quarter, matching its fourth-quarter pace, the U.S. Department of Commerce’s Bureau of Economic Analysis said today in its first report for the January to March period.
The increase in the real gross domestic product – the nation’s output of goods and services, adjusted for inflation – “primarily reflected positive contributions from personal consumption expenditures (PCE) for services, private inventory investment, exports of goods and services, and federal government spending,” increases that were partly offset by declines in housing construction and personal spending on durable goods and a rise in imports, the BEA said.
The bureau’s “advance” estimate of real GDP growth exceeded the 0.5-percent the median forecast from a Bloomberg News survey of 80 economists. (Their estimates ranged from an annual growth rate of 1.5 percent to an annual decline of 0.8 percent.)
Private businesses inventories grew by $1.8 billion in the first quarter, after shrinking $18.3 billion in the fourth quarter, the BEA said. The change, adjusted for inflation, added 0.81 percentage points to the first-quarter change in real GDP.
The BEA’s measure of consumer spending – real personal consumption expenditures; that is, PCE adjusted for inflation – rose at a 1.0-percent annual pace as spending increased for services (+3.4-percent annual rate) but fell for non-durable goods (-1.3-percent rate) and durable goods (-6.1-percent rate). The first-quarter increase, which Bloomberg said was the slowest since the second quarter of 2001, followed real-PCE increases of 2.3 percent per year in the fourth quarter and 2.8 percent in the third quarter.
Real residential fixed investment – mostly housing construction, adjusted for inflation – fell at a 26.7-percent annual rate in the first quarter, accelerating from the previous quarter’s 25.2-percent rate of decline. Non-residential construction fell at a 6.2-percent pace, compared with the fourth quarter’s 12.4-percent gain.
The price index for gross domestic purchases rose at an annual rate of 2.6 percent – lagging forecasts – after rising 2.4 percent in the previous period. Prices excluding food and energy rose at a 2.2-percent pace, slowing from the fourth quarter’s 2.5-percent annual growth rate.
“We think we’re in recession, but I don’t know that the GDP numbers are going to turn negative at all in 2008,” MarkVitner, senior economist at Wachovia Corp. in Charlotte, N.C., told Bloomberg Television. But, he added, “if you were to take out the swing in inventories, these numbers would be negative.”
Additional information, including the full Gross Domestic Product and Corporate Profits report, is available from the U.S. Department of Commerce’s Bureau of Economic Analysis at www.bea.gov.
