essay 3

THURSDAY, May 29, 2014

GDP DECLINES IN FIRST QUARTER
Second estimate of GDP revises growth down
Real gross domestic product (GDP) decreased 1.0 percent in the first quarter of 2014, according to the “second” estimate released today by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 percent. Quarter-to-Quarter Growth in Real GDP
6

4
Percent

First-quarter GDP highlights
The decline in real GDP was more than accounted for by a significant decline in inventory investment, notably by motor vehicle dealerships.
In fact, GDP less inventory investment (real final sales of domestic product) rose 0.6 percent in the first quarter.

2

Declines in exports, in business investment, in state and local government spending, and in housing investment also contributed to the decrease in first-quarter real GDP.

0

-2
II III
2010

In contrast, consumer spending increased, notably in health care and in home utilities.

IV

I

II III
2011

IV

I

II III
2012

IV

I

II III
2013

IV

I
2014

Real GDP growth is measured at seasonally adjusted annual rates.

Revisions
First-quarter real GDP growth was revised down 1.1 percentage points from the advance estimate released in April, based on newly available source data.
 Inventory investment was revised down, mainly in retail trade, in manufacturing, and in mining, utilities, and

construction.
 Imports were revised up, notably in foods, feeds, and beverages and in petroleum and related products. Partly

offsetting this revision, exports were also revised up, notably in nonautomotive capital goods and in automotive vehicles, engines, and parts.

 Profits of nonfinancial corporations fell 8.1

percent after rising 1.5 percent.
 Profits of financial corporations fell 15.0 per-

cent after rising 1.3 percent.
 Profits from the rest of the world fell 9.1 percent after rising 5.5 percent.

Quarter-to-Quarter Growth in