GDP growth strengthens in final 1Q report

WASHINGTON – The U.S. economy grew at an annual pace of 1.0 percent in the first quarter, after rising at a 0.6-percent rate in the 2007 fourth quarter, the U.S. Department of Commerce’s Bureau of Economic Analysis said today in its final report for the January to March period.
First-quarter growth in the real gross domestic product – the nation’s total output of goods and services, adjusted for inflation – was 11.1 percent higher than in the BEA’s “preliminary” 0.9-percent estimate last month and 66.7 percent higher than in the bureau’s 0.6-percent “advance” report, issued in April. (READ MORE)
“The small upward revision … primarily reflected upward revisions to exports, to personal consumption expenditures and to equipment and software that were largely offset by an upward revision to imports and a downward revision to private non-farm inventory investment,” the BEA said.
The new estimate matched the median forecast from a Bloomberg News survey of 70 economists. (Their predictions called for an annual growth rate of 0.9 percent to 1.3 percent.)
Current-dollar GDP – the market value of the nation’s goods and services – increased a revised 3.7 percent, or $126.9 billion, compared with the previous quarter to $14.20 billion. (The preliminary estimate set the rise at 3.4 percent, or $121.4 billion.) In the fourth quarter, current-dollar GDP rose 3.0 percent, or $103.7 billion.
The BEA’s measure of consumer spending – real personal consumption expenditures; that is, PCE adjusted for inflation – rose at a 1.1-percent annual rate in the first quarter, up from the 1.0-percent pace of the previous estimates.
The price index for gross domestic purchases rose at an annual rate of 3.5 percent – the same as in the preliminary estimate – lagging the fourth quarter’s 3.7-percent pace, the BEA said. But the core index excluding food and energy rose at a 2.3-percent annual rate – up from the previous estimate’s 2.2-percent rate – that matched the fourth quarter’s growth rate.
“We expect continued sluggish growth,” Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York, told Bloomberg News. “The [federal] rebates will serve as a fleeting boost to the consumer and the economy, but after that, the consumer will ultimately be forced to pull back. We expect a payback in the fourth quarter”
Meanwhile, corporate profits from current production shrank by $5.2 billion in the first quarter, rather than rising, after falling $52.9 billion in the final quarter of 2007. Taxes on corporate income shrank by $32.6 billion, rather than the $36.9 billion of the BEA’s preliminary estimate, after falling $15.0 billion in the fourth quarter, the bureau said.
Additional information, including the full Gross Domestic Product and Corporate Profits report, is available from the U.S. Department of Commerce’s Bureau of Economic Analysis at www.bea.gov.