Q1 2008 GDP (Preliminary Revised)

As expected, Q1 2008 Real GDP Growth was revised up to +0.9% from +0.6% previously.

-Weakest two quarter growth since 2001 recession;
-Private inventory investment added 0.81% to GDP growth;
-Final Sales of domestic product: (GDP growth – private inventories) 0.7% (-0.2% previously)
-Personal consumption expenditure unchanged at +1%  (slowest since Q2 2001)
-Gross private domestic investment: -6.5% (previously -4.7%);
-Residential investment "improved" to -25.5% from -26.7% (most since 1981);
-Business fixed investment: -7.8% (improved from -9.7%);
-Exports weakened to +2.8% from +5.5%;
-Imports weakened to -2.6% from +2.5% ;
-Federal Government consumption expenditure and gross investment: +4.4% (+4.6% previously);
-State and Local Govt: 0.6% (+0.5% previously)

Merrill Lynch’s David Rosenberg notes: "The key indicator of the strength of the domestic economy, final sales to domestic purchasers (GDP ex trade and inventories) remained in negative territory at -0.1% QoQ (was -0.4%). This is the first decline since 1991Q1 and is signaling a very fragile domestic economy."

Gdp_revised_may_08

via Jake

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What's been said:

Discussions found on the web:
  1. Neal commented on May 29

    -Exports weakened to +2.8% from +5.5%;

    Hey, wasn’t the good news story of the falling dollar supposed to be be more exports?

  2. Vermont Trader commented on May 29

    And it is old news… We already know how companies did in Q1. All I see is a tougher comparison for Q2..

    I want to thank all the computer programs that provided me a great opportunity to reestablish some shorts this afternoon. Please pump it up into the month end close tomorrow so that I can add some more.

  3. Steve commented on May 29

    -Private inventory investment added 0.81% to GDP growth;

    Where are you getting this? I see a +.21% contribution from inventories.

  4. Barry Ritholtz commented on May 29

    Thats the “Real” change in private inventories. My #s above are nominal

  5. bluestatedon commented on May 29

    And right on cue, all of the major media organs are trumpeting an improving economy, with the intended subtext of “we really aren’t in a recession, and besides, it’s over anyway, so crank up the credit cards, it’s full speed ahead!”

  6. Michael Donnelly commented on May 29

    I can’t believe how little attention was paid to profits. Sure the headline number was boring +1.7 billion, but that really hid what happened.

    Domestic profits -167 billion greatest drop in profits EVER

    Bonus deprectation tax accounting added +169 in “economic” profits

    Back to back profits are down -272 billion
    worst during the 2001 recession? not even half that

  7. igor l. commented on May 29

    love your website!

    btw, when you get a chance please take a look at today’s quarterly report from fdic on the overall state of banking and quality of assets in particular. i believe you will fund a few charts that would fit well on your website.

    great job on the site!

  8. cinefoz commented on May 29

    Thanks for the analysis. It makes me feel more certain about my decisions of late. I’m aching to jump on a bandwagon, but it seems a little too risky now. Things aren’t bad enough to know that ‘up’ is a sure thing. They aren’t good enough to be sure that ‘up’ is a sure thing.

  9. Ken H. commented on May 29

    I think the domestic economy is going to be down for at least a couple years. I just can’t put my head around what will replaces the housing engine. Infrastructure, alternative energy, pawnshops(he,he). Chaos does breed opportunity for the sharp eye.

    C’mon Barry, where’s the next bubble. Like the funny commercial I heard recently, “Investors have disposable income, and we need to help them dispose of it!”

  10. Steve commented on May 29

    Thats the “Real” change in private inventories. My #s above are nominal

    Why would you report “real” GDP on the first line of your post and then two lines down say:

    -Private inventory investment added 0.81% to GDP growth;

    And intend to be referring to nominal GDP. And on the very next line you’re talking about Real GDP again:

    -Final Sales of domestic product: (GDP growth – private inventories) 0.7% (-0.2% previously)

    I think you made a mistake and you’re using the change in private inventories from the Advance release, which contributed +.81% to GDP.

  11. Jim D commented on May 29

    And if inflation was actually at, say, 8%, instead of the gov’ts bizarrely manipulated number, is GDP still in positive territory?

    Don’t answer, it’s a rhetorical question.

  12. muckdog commented on May 29

    So, false alarm on all the recession chatter. Good.

  13. A Dash of Insight commented on May 29

    Comparing Data Interpretation

    Explaining and displaying data combines art and science. The information itself is objective, as are calculations of trends and changes. Despite this, there is an element of artistry.A professor leading a class is motivated to help students find the tr…

  14. Confused commented on May 29

    someone please enlighten me

    From BEA data, the current and 2000 dollar GDP for Q42007 are 14074 bil and 11675 bil, respectively. While the current and 2000 dollar GDP for Q12008 are 14195 bil and 11701 bil, respectively.

    Thus, according to my calculation growth of:
    current dollar GDP is 0.9%
    2000 dollar GDP is 0.2%

    Then, why did the reported real GDP growth is 0.9% instead of 0.2% ?

  15. Barry Ritholtz commented on May 30

    Steve:

    All of the data is right from the BEA release:

    The price index for gross domestic purchases, which measures prices paid by U.S. residents,increased 3.5 percent in the first quarter, the same as in the advance estimate; this index increased 3.7 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the first quarter, compared with an increase of 2.3 percent in thefourth.

    About 0.3 percentage point of the first-quarter increase in the index was accounted for by the pay raise for federal civilian and military personnel, which is treated as an increase in the prices of employee services purchased by the federal government.

    Real personal consumption expenditures increased 1.0 percent in the first quarter, compared with an increase of 2.3 percent in the fourth. Real nonresidential fixed investment decreased 0.2 percent, in contrast to an increase of 6.0 percent. Nonresidential structures increased 1.1 percent, compared with an increase of 12.4 percent. Equipment and software decreased 0.9 percent, in contrast to an increase of 3.1 percent. Real residential fixed investment decreased 25.5 percent, compared with a decrease of 25.2 percent.

    Real exports of goods and services increased 2.8 percent in the first quarter, compared with an increase of 6.5 percent in the fourth. Real imports of goods and services decreased 2.6 percent, compared with a decrease of 1.4 percent.

    Real federal government consumption expenditures and gross investment increased 4.4 percent in the first quarter, compared with an increase of 0.5 percent in the fourth. National defense increased 5.6 percent, in contrast to a decrease of 0.5 percent. Nondefense increased 1.8 percent, compared with an increase of 2.8 percent. Real state and local government consumption expenditures and gross investment increased 0.6 percent, compared with an increase of 2.8 percent.

    The real change in private inventories added 0.21 percentage point to the first-quarter change in real GDP, after subtracting 1.79 percentage points from the fourth-quarter change. Private businesses decreased inventories $14.4 billion in the first quarter, following a decrease of $18.3 billion in the fourth quarter and an increase of $30.6 billion in the third.

    Real final sales of domestic product — GDP less change in private inventories — increased 0.7 percent in the first quarter, compared with an increase of 2.4 percent in the fourth.

    Gross domestic purchases

    Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 0.1 percent in the first quarter, in contrast to a decrease of 0.4 percent in the fourth.

    Gross national product

    Real gross national product — the goods and services produced by the labor and property supplied by U.S. residents — increased 1.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $5.3 billion in the first quarter after increasing $37.6 billion in the fourth; in the first quarter, receipts decreased $48.1 billion, and payments decreased $53.4 billion.

    Current-dollar GDP

    Current-dollar GDP — the market value of the nation’s output of goods and services — increased 3.5 percent, or $121.4 billion, in the first quarter to a level of $14,195.6 billion. In the fourth quarter, current-dollar GDP increased 3.0 percent, or $103.7 billion.

    Revisions

    The preliminary estimate of the first-quarter increase in real GDP is 0.3 percentage point, or $8.8 billion, higher than the advance estimate issued last month. The upward revision to the percent change in real GDP primarily reflected a downward revision to imports and upward revisions to nonresidential structures and to PCE for nondurable goods that were partly offset by downward revisions to private inventory investment, to exports, and to PCE for services.

  16. number porn commented on May 30

    “Current-dollar GDP — the market value of the nation’s output of goods and services — increased 3.5 percent, or $121.4 billion, in the first quarter to a level of $14,195.6 billion.”

    I just don’t get it. How did they get figure of 3.5%? Current dollar-GDP is $14,195.6 billion, increased by 121.4 billion from last quarter.

    Last quarter GDP should be (14195.2-121.4)=14073.8 billion. Increase of 121.4 billion should represent (121.4/14073.8)=0.86% increase to GDP

    3.5% ??? where did this number come from ?

  17. Steve commented on May 30

    Barry,

    Nowhere in the part you quoted says that:

    -Private inventory investment added 0.81% to GDP growth;

    You’re using the inventory contribution from the Advanced release, not the Preliminary release.

    Inventories added .2% to GDP, which you even say in your third bullet point. (Final Sales = GDP – Inventory contribution). Your second and third points are at odds with each other.

  18. JoeD commented on Jul 15

    Question from a finance novice… I thought that a recession is defined as 2 consecutive quarters of negative growth in the GDP. the Q1 GDP of this year was +0.9%… how is it that the news is qualifying this as a recession? The economy is bad–YES, but a recession-no, right? I am not trying to downplay our economic situation, I am just trying to improve my finance chops and gain a better understanding…

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