Investments

Second estimate revises 1Q GDP higher

First quarter off to a sluggish pace

The second estimate revised the real gross domestic product higher, increasing it to an annual rate of 1.2% in the first quarter of 2017, according to the second estimate released by the Bureau of Economic Analysis.

Originally, the first estimate from the BEA stated that the real GDP increased 0.7% in the first quarter, compared to the fourth quarter’s increase of 2.1%.

The GDP noted the estimate released Friday is based on more complete source data than what was available for the advance estimate issued last month. 

In the second estimate for the first quarter, the general picture of economic growth remained the same.

“Increases in nonresidential fixed investment and in personal consumption expenditures were larger and the decrease in state and local government spending was smaller than previously estimated. These revisions were partly offset by a larger decrease in private inventory investment,” the report stated.

The chart below shows the changes in GDP over the years. For the past three quarters the real GDP has decreased from the quarter before.

Click to enlarge

chart

(Source: GDP)

An article in CNBC helped more color to the piece, helping to explain the slowdown:

U.S. economic growth slowed less sharply in the first quarter than initially thought, but the weakness was likely an aberration amid a strong labor market that is near full employment.

The sluggish first-quarter growth pace is, however, probably not a true reflection of the economy's health. GDP for the first three months of the year tends to underperform because of difficulties with the calculation of data that the government has acknowledged and is working to resolve.

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