Yesterday morning, the Commerce Department released its preliminary estimate of first-quarter 2004 gross domestic product. Commerce reported that real GDP expanded at an annual rate of 4.4% during the quarter, a bit better than the 4.2% rate reported in its advance estimate of first-quarter activity, released on 4/29.
The three-month period ended March was the 10th consecutive quarter of reported real growth, and the Commerce Department's 4.4% preliminary estimate was in line with the consensus forecast, which was for growth at around a 4.5% rate.
In comparing the preliminary first-quarter numbers with the Commerce Department's final estimate for last year's fourth quarter, real GDP was up $115.9 billion or about 1.093%. Add one, then raise this to the fourth power, and you get the rounded annual rate of change of 4.4%.
Versus 2003's first quarter, real GDP was up $505.6 billion, or 5.0%. The respective numbers: 1Q2004 = $10716.0 billion; 1Q2003 = $10210.4 billion.
Four of the six primary categories added to growth in the preliminary versus advance first-quarter estimates. In order of their dollar contribution, they were: (1) inventory change ($12.9 billion), (2) government spending ($4.1 billion), (3) residential fixed investment (housing, $2.2 billion) and (4) personal consumption expenditures ($1.7 billion).
The two categories subtracting from growth in the preliminary versus advance estimates were: (1) nonresidential fixed investment (capital spending, minus $3.8 billion), and (2) net exports (minus $10.6 billion, by virtue of a reported widening in the deficit from $514.6 billion to $525.2 billion).
Additional items of note:
(1) Even after a material upward revision in the preliminary estimate, government spending at the state and local level remained in the red, versus last year's fourth quarter.
(2) The increase in inventory change in the latest report was equal to 174% of the revised increase in total GDP. Total inventory change of $28.2 billion in the preliminary estimate was equal to more than 24% of the first-quarter's GDP gain over last year's fourth quarter.
(3) Yesterday's report showed only small changes from the advance estimate in key GDP inflation measures . The deflators used for overall GDP and for personal consumption expenditures were revised to respective rates of 2.6% and 3.0%, versus 2.5% and 3.2% in the advance estimate, and up from 1.5% and 1.0% during last year's fourth quarter.
The following table breaks out in greater detail the numbers discussed above.
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PRELIMINARY ESTIMATE OF FIRST-QUARTER 2004
REAL GROSS DOMESTIC PRODUCT (Released
05/27 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
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1Q2004 4Q2003 Change/
Prelim. Final Impact
------------------------
Real GDP 10716.0 10600.1 4.4%
Inventory Change 28.2 9.0 $19.2
Real Final Sales 10682.6 10586.4 3.7%
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Components of GDP
-----------------
Personal Consumption 7557.3 7486.2 3.9%
Nonres. Fixed Investment* 1186.0 1169.4 5.8%
Resid. Fixed Investment 531.5 526.6 3.8%
Net Exports -525.2 -515.2 -$10.0
Government Purchases* 1924.4 1910.7 2.9%
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Implicit Price Deflators:
Gross Domestic Product 2.6% 1.5% --
Gross Domestic Purchases 3.0% 1.0% --
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*MEMO ITEMS
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Government Purchases
--------------------
Total 1924.4 1910.7 2.9%
State & Local 1193.8 1195.9 -0.7%
Federal 731.3 715.5 9.1%
National Defense 489.7 474.7 13.3%
Nonresidential
Fixed Investment
----------------
Total 1186.0 1169.4 5.8%
Structures 232.6 236.9 -7.1%
Equipment & Software 961.9 939.7 9.8%
Info. Processing
Equip. & Software 581.9 559.5 17.0%
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MAJOR GDP COMPONENTS -- CHANGES BETWEEN
"PRELIMINARY" AND "ADVANCE" 1Q2004 ESTIMATES
(Billions of 2000 Chained Dollars at
Seasonally Adjusted Annual Rates)
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1Q2004 1Q2004
Prelim. Advance Change
----------------------------
Real GDP 10716.0 10708.6 7.4
Inventory Change 28.2 15.3 12.9
Real Final Sales 10682.6 10687.8 -5.2
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Personal Consumption 7557.3 7555.6 1.7
Nones. Fixed Invest. 1186.0 1189.8 -3.8
Resid. Fixed Invest. 531.5 529.3 2.2
Net Exports -525.2 -514.6 -10.6
Govt. Purchases 1924.4 1920.3 4.1
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REAL GROSS DOMESTIC PRODUCT (SEASONALLY
ADJUSTED ANNUAL RATES, 2000 CHAINED DOLLARS)
Year Q1 Q2 Q3 Q4
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2004 4.4% -- -- --
2003 2.0% 3.1% 8.2% 4.1%
2002 4.7% 1.9% 3.4% 1.3%
2001 -0.2% -0.6% -1.3% 2.0%
2000 1.0% 6.4% -0.5% 2.1%
1999 3.4% 3.4% 4.8% 7.3%
1998 4.5% 2.7% 4.7% 6.2%
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MEMO ITEM: Annual change in real GDP
before and after the "comprehensive
revision" published by the Commerce
Department on 12/10/03.
----------------------------------------
1929-2002 1959-1992 1992-2002
---------------------------------
After 3.4% 3.4% 3.2%
Before 3.4% 3.4% 3.2%
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