Revised GDP data
released by the government for first quarter shows the U.S. economy may be weaker
than initially thought.
Gross
domestic product (GDP) rose at an annual 1.8% in first quarter, a big drop from
the 2.4% reported by the Commerce Department in May. GDP is the broadest
measure of economic activity and an indicator of the overall economic health.
While common for revised estimates to be released, such a large revision was
not expected by most economists.
The
weaker figures came primarily from downward revisions to consumer spending,
exports and commercial real estate. Measures of consumer spending, accounting for
roughly two-thirds of the GDP measure, rose at a 2.6% annualized pace in the
first quarter, down from the 3.4% estimate released in the most recent report.
The GDP numbers
could change again next month when the Commerce Department completes its “comprehensive
revision” to the GDP data. This comprehensive revision is a complete overhaul of GDP data, going back to 1929. These revisions happen only
every 4-6 years.
In
other economic indicators, spending on nonresidential buildings shrunk 8.3% in first
quarter, which offset some of the economic boost from the ongoing housing
recovery. And thelargest drag on the U.S. economic growth has been a result of
U.S. exports contracting and continued government spending cuts.