RTTNews - Economic activity in the first quarter contracted at a slightly slower than previously estimated pace, according to a report released by the Commerce Department on Friday, although the report also downwardly revised the pace of consumer spending growth in the quarter.
The report showed that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
With the revision, the drop in first quarter GDP marks a somewhat more notable deceleration in the pace of contraction compared to the 6.3 percent decrease reported for the fourth quarter.
Nonetheless, Peter Boockvar, equity strategist at Miller Tabak, noted, With the economy two-thirds done with the second quarter and the market looking towards an expected improvement in 2nd half GDP, this revision should be looked at as old news.
The Commerce Department said that the revision to the pace of contraction reflected upward revisions to private non-farm inventory investment and exports. However, the upward revisions were partly offset by the downward revision to consumer spending growth.
According to the revised data, consumer spending increased by 1.5 percent in the first quarter compared to the previously reported 2.2 percent growth. The increase in spending still marks a notable turnaround compared to the steep declines seen in the two previous quarters.
The downward revision to the pace of consumer spending growth came as spending on non-durable goods was revised to show a 0.6 percent decrease in the first quarter compared to the 1.3 percent increase that was originally reported.
Still, the report said that the slowdown in the pace of contraction compared to the fourth quarter reflected a larger decrease in imports, an upturn in consumer spending on durable goods, and a smaller decrease in consumer spending on non-durable goods.
The positive contributions were partly offset by larger decreases in private inventory investment and in non-residential structures and a downturn in federal government spending.
Additionally, the Commerce Department said that motor vehicle output subtracted 1.36 percentage points from the first-quarter change in GDP after subtracting 2.01 percentage points from the fourth-quarter change.
The report also showed that the increase in the GDP price index was revised down to 2.8 percent from the previously reported 2.9 percent increase. The index edged up by 0.5 percent in the fourth quarter.
Consumer prices fell by an unrevised 1.0 percent in the first quarter following a 4.9 percent decrease in the fourth quarter, while core consumer prices, which exclude food and energy prices, rose by an unrevised 1.5 percent after a 0.9 percent increase in the previous three months.
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