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GDP:  Q1 Revised Down Just a Touch

May 30, 2018

Bottom Line: Economic activity was slightly lower than previously estimated in 2018 Q1-18. In final sales categories, fixed investment was revised higher, while net exports, residential investment, consumption, and government purchases, and were each revised a touch lower. The data indicates that the 1st Quarter ended slightly slower than where it started and suggests the potential for modest downside risk to the 2018 Q2 GDP consensus estimate of 3.1%.

GDP was REVISED DOWN by 0.1 points to 2.2% in this second estimate of economic activity for Q1-18. This was a touch below market expectations for no change revision to 2.3%.

Economic activity is now 2.8% ABOVE its year ago level and 15.9% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new March data, this revision suggests that the economic activity declined slightly at the end of the quarter.

  • Consumer Spending was revised lower by -0.03% to 1.0%, contributing 0.71% to economic growth.
  • Business Fixed Investment was revised higher by 3.11% to 9.2%, contributing 1.13% to economic growth.
  • Residential Investment was revised lower by -2.04% to -2.0%, contributing -0.08% to economic growth.
  • Inventory Investment was revised moderately lower, contributing 0.13% to economic growth.
  • Net Exports were revised modestly lower with a modest decline in Exports and slight growth in Imports, contributing 0.08% to economic growth.
  • Government Purchases were revised slightly lower but grew modestly for the 9th time in the past 12 quarters, contributing0.20% to economic growth.

As a result of all of these changes, Real Final Sales was revised modestly higher while Real Domestic Demand was revised modestly higher.

The GDP Price Index was REVISED LOWER by -0.04 points to 2.0%, compared with market expectations for no change at 2.0%. Economy-wide prices are now 1.9% ABOVE its year ago level.

Article by Contingent Macro Advisors