First-Quarter GDP Growth Revised Down Again as Jobless Data Weighs on Outlook
Real gross domestic product (GDP) grew at an annual rate of 2.7% in Q110 from the previous quarter, according to the third estimate from the Commerce Department's Bureau of Economic Analysis (BEA). At the same time, continued high levels of unemployment and weekly jobless claims are weighing on the economic outlook. Real GDP -- measured as the national output of goods and services produced by labor and property -- grew 5.6% in Q409. The newly revised Q110 estimate is 30 basis points, or $9.6bn, lower than the previous estimate. Today's estimate is based on "more complete" data than was available in recent months, the BEA said today. It marks the second downward revision, from 3.2% initially projected in April and the later-revised 3% estimated in May. The first-quarter real GDP growth primarily reflects positive contributions from personal consumption expenditures, private inventory investment, exports and non-residential fixed income, BEA said. These gains were somewhat offset by contracting state and local government spending and residential fixed investment. Imports, which are subtracted from GDP, also increased. Economist and fellow at the Royal Institute of Chartered Surveyors (RICS) Lawrence Souza tells HousingWire a quarterly GDP growth of 5-6% is needed to bring down the national unemployment rate a single percentage point. At that rate, normal levels of employment at 95-96% of the available labor force (4-5% unemployment rate) could be achieved by 2015. Weak private-sector employment numbers missed analyst expectations in May. Total non-farm payrolls grew by 431,000 in May as the 2010 Census added 411,000 temporary employees. The added jobs helped bring the unemployment rate down slightly to 9.7%, from 9.9% in April. In May alone, employers took 1,412 separate mass layoff actions, resulting in the loss of 135,789 jobs, according to the US Department of Labor's (DOL) Bureau of Labor Statistics. Layoffs continue, with the DOL receiving 457,000 initial unemployment insurance claims in the week ending June 19, a decrease of 19,000 from the previous week, based on seasonally adjusted data. Write to Diana Golobay.