Advance Estimate Shows GDP Grew at a Real, Annualized Rate of 1.8% in the 1^st Quarter

The Bureau of Economic Analysis (BEA) released its advance estimate of growth in the inflation-adjusted (“real”) gross domestic product (GDP) for the 1^st quarter of 2011 (available here). 

According to the advance estimate, annualized GDP growth in the 1^st quarter was 1.8%.  The Blue Chip Consensus forecast had been for growth of 2.6% in the 1^st quarter.  Growth in the 4^th quarter of 2010 was 3.1%, and growth in the 3^rd quarter was 2.6%.   The BEA will release its second estimate for 1^st quarter GDP growth on May 26^th. 

Highlights:

• The 1.8% rate of growth primarily reflected positive contributions from personal consumption expenditures, private inventory investment, exports, and nonresidential fixed investment.  These positive contributions were partly offset by negative contributions from imports, federal government spending, and state and local government spending.
• The deceleration in GDP growth, from a rate of 3.1% in the 4^th quarter, was due to a sharp upturn in imports (a subtraction from GDP), decelerations in personal consumption expenditures, nonresidential fixed investment, and exports, and a larger decrease in federal government spending.  This downward momentum was partly offset by a steep upturn in private inventory investment.