Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.
The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.
The advance Q1 GDP report, with 0.5% annualized growth, was below expectations of a 0.7% increase.
Personal consumption expenditures (PCE) increased at a 1.9% annualized rate in Q1, down from 2.4% in Q4. Residential investment (RI) increased at a 14.8% pace. However equipment investment decreased at a 8.6% annualized rate, and investment in non-residential structures decreased at a 10.7% pace (due to the decline in oil prices).
The key negatives were investment in inventories (subtracted 0.33 percentage point), trade (subtracted 0.34 percentage point), nonresidential investment (subtracted 0.76 percentage points) and Federal government spending (subtracted 0.11 percentage points).
I’ll have more later …