June 27, 2024


The final estimate of first quarter GDP growth was 1.4% compared to a preliminary estimate of 1.3%.  Very little change in the top-line GDP growth rate, but that includes a softer reading for consumption spending with slight upward revisions to trade and investment spending..

Final sales, which is GDP excluding the change in business inventories, rose 1.8% in the first quarter   Given an increase in GDP of 1.4% and a 1.8% increase in final sales, the change in inventories subtracted 0.4% from GDP growth in the first quarter.

Final sales to domestic purchasers which excludes both the change in inventories and trade rose 2.4% in the first quarter.  With a 1.8% increase in final sales and a 2.4% increase in final sales to domestic purchasers, the trade component subtracted 0.6% from GDP growth in the first quarter as exports rose 1.6% and imports rose 6.1%.

Consumption spending gained 1.5% in the first quarter after having climbed jumped 3.3% in the fourth quarter. Spending started off at a brisk pace in the first quarter but seemed to slow in the final two months in that quarter.  Spending on goods fell 2.3% in the first quarter while spending on services climbed by 3.3%.

Nonresidential investment rose 4.4% in the first quarter after increasing 3.7% in the third quarter.  Spending on structures rose 3.4% after four consecutive quarters of double-digit growth.  Equipment spending rose 1.6%.   In today’s world firms need to invest in technology that will allow them to survive difficult times, and/or help them expand their production and delivery functions to meet surging demand.  Intellectual property rose 7.7% in the first quarter.    In the past four quarters spending on intellectual property has risen 4.1%.

Residential investment jumped 16.0% in the first quarter after having risen 2.8% in the fourth quarter.  Housing took the brunt of higher mortgage rates and soaring home prices and the recent upturn signals that this category has finally hit bottom.  With current homeowners reluctant to put their house on the market and the supply of existing homes on the market at an all-time record low level, potential home buyers have turned to new homes where supply is more plentiful as an alternative.  Builders clearly ramped production in the first quarter.  However, shortages of labor and difficulty in finding sizeable lots to develop means that the increases in this category in the quarters ahead may be limited.

The foreign sector as measured by the deficit for real net exports widened by $41,8 billion in the first  quarter to $960.3 billion after having narrowed by $12.2 billion in the fourth quarter. Exports rose 1.6% in the first quarter while imports climbed by 6.1%.

.Federal government spending fell 0.2% in the first quarter after having risen 2.4% in the fourth quarter.  Defense spending declined 0.9% while nondefense spending gained 0.6%.

We expect GDP to expand at about a 2.8% pace in the second quarter of this year and  then slow to about 1.9% in each of the final two quarters of the year..  The economy keeps cranking out jobs and wages keep rising which will boost consumer income and spending, but at a slower pace than earlier in the year.

Stephen Slifer


Charleston, SC