Out of today's huge data dump, which included initial and continuing jobless claims, durable goods and capex, retail and wholesale inventories, advance trade goods balance... and finally, the third and final revision to Q1 GDP, it was the last data point would have the least impact as it was the most delayed looking at the state of the US economy at the now ancient March 31, 2021. And sure enough, the update from the BEA assured that virtually nobody would care about today's GDP print which came in at 6.4%, unchanged from the previous print and also right on top of expectations.
There were no surprises in the closely watched personal consumption data either, which came at 11.4%, on top of expectations, and just fractionally higher than the 11.3% 2nd estimate.
The increase in real GDP in the first quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports. Imports increased.
Meanwhile, focusing on the third revision to GDP, upward revisions to nonresidential fixed investment, private inventory investment, and exports were offset by an upward revision to imports, which are a subtraction in the calculation of GDP.
Here are some of the highlights:
- Personal Consumption contributed more than 100%, or 7.42%, of the final 6.360% GDP print, up from 7.40% in the 2nd revision
- Fixed Investment added 2.09% to the bottom GDP number, up from 1.96% previously
- Change in private inventories subtracted -2.67%, a slight decline from the -2.78% last month
- Net exports saw the biggest difference, subtracting -1.5% from the bottom-line GDP on a jump in imports to -1.29% from -0.91%. Net exports subtracted -1.20% in the previous GDP estimate.
- Finally the contribution of government was unchanged, at 1.02% in the final estimate.
Here is the same data expressed as a change from the preceding quarter.
The increase in PCE reflected increases in durable goods (led by motor vehicles and parts), nondurable goods (led by food and beverages), and services (led by food services and accommodations). The increase in nonresidential fixed investment reflected increases in equipment (led by information processing equipment) and intellectual property products (led by software). The increase in federal government spending primarily reflected an increase in payments made to banks for processing and administering the Paycheck Protection Program loan applications as well as purchases of COVID-19 vaccines for distribution to the public. The decrease in private inventory investment primarily reflected a decrease in retail trade inventories (mainly by motor vehicles and parts dealers).
Real disposable personal income (DPI)— personal income adjusted for taxes and inflation—increased 62.0 percent in the first quarter, an upward revision of 0.3 percentage point from the second estimate. The increase in current-dollar DPI primarily reflected an increase in government social benefits related to pandemic relief programs, notably direct economic impact payments to households established by the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. Personal saving as a percent of DPI was 21.5 percent in the first quarter, an upward revision of 0.1 percentage point.
Corporate profits from current production: Profits increased 2.4 percent at a quarterly rate in the first quarter after decreasing 1.4 percentin the fourth quarter. Corporate profits increased 15.5 percent in the first quarter from one year ago. Profits were impacted by provisions from the Paycheck Protection Program.
- Profits of domestic nonfinancial corporations increased 5.3 percent after decreasing 3.4 percent.
- Profits of domestic financial corporations decreased 1.3 percent after increasing 3.7 percent.
- Profits from the rest of the world decreased 2.4 percent after decreasing 0.2 percent.
Today’s release also includes estimates of GDP by industry, or value added—a measure of an industry’s contribution to GDP. Private goods-producing industries increased 5.4percent, private services-producing industries increased 7.7 percent, and government increased 0.2percent.Overall, 17 of 22 industry groups contributed to the first quarter increase in real GDP.
- The increase in private goods-producing industries primarily reflected an increase in durable goods manufacturing (led by computer and electronic products, fabricated metal products, and machinery). The increase was partially offset by decreases in nondurable goods manufacturing (led by petroleum and coal products) and agriculture, forestry, fishing, and hunting (led by farms).
- The increase in private services-producing industries primarily reflected increases in professional, scientific, and technical services; information (led by data processing, internet publishing, and other information services); administrative and waste management services (led by administrative and support services);real estate and rental and leasing; and retail trade. These increases were partly offset by decreases in other services (which includes activities of political organizations); health care and social assistance (led by ambulatory health care services); and utilities.
Looking at the all important PCE breakdown, prices of goods and services purchased by U.S. residents increased 4.0 percent in the first quarter after increasing 1.7 percent in the fourth quarter. Energy prices increased 45.8 percent in the first quarter while food prices decreased 0.1 percent. Excluding food and energy, prices increased 3.3 percent in the first quarter after increasing 1.6 percent in the fourth quarter.
In terms of the key prints, core PCE came in at 2.5% Q/Q as expected, while the Q1 GDP Price index was up 4.3%, also as expected.
Overall, the data was largely meaningless not only because it is extremely stale but because there has been a huge change between Q1 and Q2, and as such what happens in the second quarter and even more importantly, Q3, is all that matters not only for markets but also for the Fed.