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Bureau of Economic Analysis: USA Quarterly GDP Estimate
Official Statement by the Bureau of Economic Analysis is at bottom of this post.
USA GDP Q1 2011 Second Estimate The Bureau of Economic Analysis released the Second Estimate of Q1 2011 GDP which remained at +1.8% QoQ, for a total GDP of $15.01 trillion (annualized). This is a significant decline from the the Q4 2010 GDP of +3.1%. The Q1 2011 GDP (second estimate) of +1.8% is the lowest since Q2 2010 (+1.7%). However, the GDP has increased for 7 consecutive quarters, since Q3 2009.
GDP +3.0% Benchmark A +3.0% annualized GDP growth rate is generally accepted as the minimum necessary to generate some jobs growth and indicative of a more robust recovery. Therefore, the USA economic expansion was slowing in Q1 2011 (+1.8%) compared to Q4 2010 (+3.1%), which slows jobs creation and and does not bring down the true, not official, unemployment and underemployment rates. The Big Question: where is the USA economy headed? Three scenarios are usually discussed: 1) a double dip recession whereby the GDP will turn negative yet again, 2) the economy will continue "bottom bouncing" with very slow growth and a continuing high unemployment rate (i.e., less than +3.0% growth), or 3) the bottom is in and GDP growth will accelerate to above +3.0% and continue above, jobs will be created, and the unemployment will continue to decrease. Scenario 2) with USA slow economic growth appears to be the consensus for 2011 with an annual GDP growth projected of approximately +2.5% or slightly greater.
USA Real GDP % by Quarter (Chart) The chart below is the annualized percentage change of the Real GDP (seasonally adjusted at annual rate) from the preceding quarter (QoQ), a common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning Q3 2008, a rebound peaking in Q4 2009. The Q4 2010 +3.1% is now the recent recovery peak. The Federal Reserve via the Federal Open Market Committee has resorted to QE2, a second round of quantitative easing, plus indirect quantitative easing in an attempt to boost the economy, increase the GDP, and bring down the unemployment rate. QE2 will be completed at the end of June 2011 although reinvestment of U.S. Treasuries and mortgage-back securities into longer-term securities will continue indefinitely (indirect quantitative easing). The chart covers the USA Quarterly GDP as reported by the Bureau of Economic Analysis from Q1 2005 through the latest quarter reported.
USA Real GDP $ by Quarter (Chart) The chart below is the Real GDP (seasonally adjusted at annual rate) in total current dollars (annualized). As can be seen, the USA economy peaked in Q3 2008, bottomed in Q2 2009, and now has increased 7 consecutive quarters. The Q1 2011 GDP (annualized) has exceeded both 2008 Q3 and the previous peak in Q4 2010 to reach an all-time high. The chart covers the USA Quarterly GDP (annualized) as reported by the Bureau of Economic Analysis from Q1 2005 Q1 through the latest quarter reported.
Commentary The Q1 2011 USA Quarterly GDP (second estimate) of +1.8% is disappointing and borderline dismal. We had continued to estimate a higher Q1 2011 GDP, a maximum of +3.0%, and had hoped the second estimate to be greater than +2.0% and perhaps close to or at +2.5%. Any such upward revision can only be hoped for now with the final estimate on June 24. Bureau of Economic Analysis Q1 2011 GDP highlights were:
The following components contributed to the slowdown in real GDP:
• Imports turned up sharply; the largest contributor was a large upturn in petroleum and products.
• Consumer spending slowed, partly reflecting a slowdown in autos and parts.
• Government spending, mainly federal defense spending, fell much more in the first quarter than in the fourth quarter.
• Business investment slowed, mainly due to a downturn in structures. The first-quarter decrease in structures was the largest since the first quarter of 2010.
These contributions to the slowdown in growth were partly offset by a large upturn in inventory investment.
The Bureau of Economic Analysis Commentary on the 1st Quarter 2011 GDP (second estimate)
(May 26, 2011) Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.
The following components contributed to the slowdown in real GDP:
• Imports turned up sharply; the largest contributor was a large upturn in petroleum and products.
• Consumer spending slowed, partly reflecting a slowdown in autos and parts.
• Government spending, mainly federal defense spending, fell much more in the first quarter than in the fourth quarter.
• Business investment slowed, mainly due to a downturn in structures. The first-quarter decrease in structures was the largest since the first quarter of 2010.
These contributions to the slowdown in growth were partly offset by a large upturn in inventory investment.
The Bureau of Economic Analysis Commentary on the 1st Quarter 2011 GDP (second estimate)
(May 26, 2011) Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.
The GDP estimates released today are based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 1.8 percent (see "Revisions" on page 3).
The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
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