U.S. First-Quarter GDP Revised Higher to 0.8%
May 27 2016 - 09:10AM
Dow Jones News
WASHINGTON—The U.S. economy's first-quarter slowdown was less
pronounced than initially thought, and recent data have pointed to
a pickup for growth this spring.
Gross domestic product, a broad measure of goods and services
produced across the U.S. economy, expanded at a 0.8% seasonally
adjusted annual rate in the first three months of 2016, the
Commerce Department said Friday.
That was up from the agency's initial estimate last month, which
pegged the first quarter's growth rate at 0.5%. Economists surveyed
by The Wall Street Journal expected growth would be revised up to a
1.0% pace.
Economic activity had expanded at a 1.4% pace in the fourth
quarter of 2015. On an annual basis, GDP grew 2.0% in the first
quarter, identical to the fourth quarter's annual growth rate.
Revisions were fairly modest. Compared with last month's report,
the latest figures showed a larger gain for residential investment
and smaller drags on overall growth from private inventories and
foreign trade.
Friday's report also offered the first official estimate of U.S.
corporate profits during the first three months of the year.
Profits after tax, without inventory valuation and capital
consumption adjustments, rose at a 1.9% rate from the fourth
quarter.
The rebound came after two consecutive quarters of falling
profits. Still, profits were down 3.6% last quarter compared with a
year earlier.
A separate measure that more closely aligns with economic
output, pretax profits with inventory valuation and capital
consumption adjustments, rose at a more modest 0.3% rate in the
first quarter and declined 5.8% from a year earlier.
The output data were adjusted for inflation, but profits data
didn't account for price changes.
At a time of slow economic growth around the world, "it's really
hard for these companies to find growth anywhere," said Christine
Short, senior vice president at analytics firm Estimize. But while
falling energy prices and a strengthening dollar have squeezed
earnings in recent quarters, she said those headwinds appear set to
fade as oil prices and the dollar stabilize.
The profits picture "does look to incrementally get better" over
the course of 2016, Ms. Short said.
Deere & Co. last week reported a 4% drop in equipment sales
and a 28% decline for profits in the three months ended April 30
compared with a year earlier. The Moline, Ill.-based farm and
construction machinery manufacturer said it expects a 9% decline in
sales this fiscal year as it faces "the continuing impact of the
downturn in the global farm economy and further weakness in the
construction equipment sector," Chief Executive Samuel Allen said
in a statement.
But Santa Clara, Calif.-based computer chip maker Nvidia Corp.
said its profit surged 46% in the latest quarter compared with a
year earlier. "We're seeing great traction in gaming," which is
"just a larger and larger market," Chief Executive Jen-Hsun Huang
told analysts earlier this month.
U.S. economic growth has frequently followed the same pattern
since the recession ended nearly seven years ago: a weak first
quarter followed by a second-quarter rebound. This year may be no
exception. Recent readings on industrial production, retail sales
and foreign trade have all pointed to stronger growth in the spring
months.
"If the problem of seasonal adjustment remains, which I am of
the opinion that it does, the growth over the rest of the year
should be considerably more upbeat than what transpired in the
first quarter," Federal Reserve Bank of Philadelphia President
Patrick Harker said Monday.
Forecasting firm Macroeconomic Advisers on Thursday estimated
GDP growth would pick up to a 2.5% pace in the current quarter. The
Federal Reserve Bank of Atlanta's GDPNow model projected the
second-quarter's growth rate at 2.9%.
Consumer spending, which generates the majority of U.S. economic
output, expanded at a 1.9% pace in the first quarter, unchanged
from the earlier estimate.
Household outlays, the housing sector and spending by state and
local governments all provided positive contributions to growth in
the first quarter. Business investment, inventories and foreign
trade were drags on growth.
An alternative measure of U.S. economic activity produced by the
Commerce Department, gross domestic income, expanded at a 2.2% pace
in the first quarter, up from the fourth-quarter's growth rate of
1.9%.
The agency on June 28 will release additional revisions to
first-quarter output data.
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com and Jeffrey
Sparshott at jeffrey.sparshott@wsj.com
(END) Dow Jones Newswires
May 27, 2016 08:55 ET (12:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
NVIDIA (NASDAQ:NVDA)
Historical Stock Chart
From Feb 2024 to Mar 2024
NVIDIA (NASDAQ:NVDA)
Historical Stock Chart
From Mar 2023 to Mar 2024