June 27, 2024
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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%.
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
NumberNomics
Charleston, SC
Mr. Slifer –
The fed in last 3 months since the September spike has injected approximately $60 billion/month into the “repo” market, and plans to potentially add as much as another half trillion by mid January, according to reports in the Financial Times. Mr. Powell rejected comparisons of this with earlier Quantitative Easing, insisting it was different. Since the repo market is for overnight or short term loans, one assumes these massive amounts will be repaid promptly, though there has been no mention of that in the papers. Such massive amounts of money would seem to contribute to the bullish equity markets we’re seeing. Can you educate me as to how these injections of credit influence the market, GDP, etc?
Hi Frank,
Thanks for your comment and sorry for the delayed response. Your question is not an easy one to answer so rather than a lengthy explanation here I will respond to your personal e-mail address. Thanks for your question. it is a good one.
Steve
Steve –
The second graph in this section, “Final Sales”, has the x-axis mislabeled in regard
to the applicable dates.
Hi Frank. Merry Christmas. You are right. The data shown are for the dates I wanted, but somehow the x-axis was messed up. I changed it in the original. Thanks for the catch.
Steve