That’s a pretty huge downward revision to 1Q GDP - to 1.8% from 2.4%. Mostly in downgrade of consumer spending.
The Commerce Department reported today that U.S. gross domestic product grew at a sluggish 1.8% annually adjusted rate in the first quarter of this year, down from last month’s estimate of 2.4%. Although the revised number is still a significant jump from the fourth quarter’s 0.4% growth rate, it’s still a fairly large revision and stands in contrast to a recent run of positive data. The biggest driver of the downward revision was in consumer spending, which was last reported growing at 3.4% before today’s 2.6% figure. Spending by individuals, called “personal consumption expenditures” in GDP figures, accounts for about two-thirds of GDP.
Downtown Josh Brown
US econ data is now totally incomprehensible. Like Bob Dylan RT @BloombergNews: BREAKING: Economy in U.S. grew 1.8% in 1Q, revised from 2.4%
This lowish figure stands in contrast to recent positive data showing consumer resilience and optimism about the economy. One measure of consumer confidence, The Conference Board’s consumer confidence index, hit a five-year high yesterday thanks to continuing job growth and rises in home prices. Sales of new homes were at their highest level since July 2008, and the Case-Shiller index, which tracks home prices in 20 metropolitan areas, advanced 12% in the last year. A survey of consumers done by Goldman Sachs showed that “consumer spending intent,” which measures how much discretionary spending people intend to do in the next six months, also hit a post-recession high. This data, along with the consumer confidence data, is forward-looking, measuring both how consumers feel and their plans going forward. The GDP data, on the other hand, is a look back at the first quarter of the year. Hopefully the next big surprise is on the upside.