Earlier today, the Commerce Department released its final estimate of first-quarter 2004 gross domestic product.
Commerce reported that real GDP grew at an annual rate of 3.9% during the quarter, down 0.5% from the 4.4% rate reported in its preliminary estimate of first-quarter activity, released on 5/27. This is a difference larger than normally occurs between preliminary and final estimates. Moreover, after the
latest revision, first-quarter 2004 GDP actually grew at a slower rate than last year's fourth-quarter result of 4.1%.
The three-month period ended March was the 10th consecutive quarter of reported real growth. However, the 3.9% final estimate was noticeably below the consensus forecast, which looked for growth at the same 4.4% rate reported in May's preliminary estimate.
In comparing the final first-quarter numbers with the Commerce Department's final estimate for last year's fourth quarter, real GDP was up $102.0 billion or about 0.962%. Add one, then raise this to the fourth power, and you get the rounded annual rate of change of 3.9%.
Versus 2003's first quarter, real GDP rose $491.7 billion, or 4.8%. The respective numbers: 1Q2004 = $10702.1 billion; 1Q2003 = $10210.4 billion.
Two of the six primary categories added to growth in the final versus preliminary first-quarter estimates. In order of their dollar contribution, they were: (1) residential fixed investment (housing, +$1.0 billion), and (2) government purchases (+$0.3 billion).
Four of the six categories subtracted from growth in the final versus preliminary estimates. In order of their dollar contribution, they were: (1) nonresidential fixed investment (capital spending, -$1.4 billion), (2) personal consumption expenditures (-$1.5 billion), (3) inventory change (-$2.7 billion), and (4) net exports (-$10.4 billion, by virtue of a reported widening in the deficit from $525.2 billion to $535.6 billion).
Additional items of note:
(1) Government spending at the state and local level remained slightly in the red, versus last year's fourth quarter.
(2) Total inventory change of $25.5 billion in the final estimate was equal to 25% of the first quarter's GDP gain over last year's fourth quarter.
(3) Today's report showed small increases from the preliminary estimate in key GDP inflation measures . The deflators used for overall GDP and for personal consumption expenditures were revised to respective rates of 2.8 and 3.2%, versus 2.6% and 3.0% in the preliminary estimate, and up from 1.5% and 1.0% during last year's fourth quarter. These figures suggest a whiff of "stagflation" in the first quarter's final results.
The following table breaks out in greater detail the numbers discussed above.
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FINAL ESTIMATE OF FIRST-QUARTER 2004
REAL GROSS DOMESTIC PRODUCT (Released
06/25 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
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1Q2004 4Q2003 Change/
Final Final Impact
------------------------
Real GDP 10702.1 10600.1 3.9%
Inventory Change 25.5 9.0 $16.5
Real Final Sales 10671.2 10586.4 3.2%
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Components of GDP
-----------------
Personal Consumption 7555.8 7486.2 3.8%
Nonres. Fixed Investment* 1184.6 1169.4 5.3%
Resid. Fixed Investment 532.5 526.6 4.6%
Net Exports -535.6 -515.2 -$20.4
Government Purchases* 1924.7 1910.7 3.0%
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Implicit Price Deflators:
Gross Domestic Product 2.8% 1.5% --
Gross Domestic Purchases 3.2% 1.0% --
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*MEMO ITEMS
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Government Purchases
--------------------
Total 1924.7 1910.7 3.0%
State & Local 1195.1 1195.9 -0.3%
Federal 730.2 715.5 8.5%
National Defense 489.6 474.7 13.2%
Nonresidential
Fixed Investment
----------------
Total 1184.6 1169.4 5.3%
Structures 232.4 236.9 -7.4%
Equipment & Software 960.7 939.7 9.2%
Info. Processing
Equip. & Software 580.9 559.5 16.2%
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MAJOR GDP COMPONENTS -- CHANGES BETWEEN
"FINAL" AND "PRELIMINARY" 1Q2004 ESTIMATES
(Billions of 2000 Chained Dollars at
Seasonally Adjusted Annual Rates)
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1Q2004 1Q2004
Final Prelim. Change
----------------------------
Real GDP 10702.1 10716.0 -13.9
Inventory Change 25.5 28.2 -2.7
Real Final Sales 10671.2 10682.6 -11.4
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Personal Consumption 7555.8 7557.3 -1.5
Nones. Fixed Invest. 1184.6 1186.0 -1.4
Resid. Fixed Invest. 532.5 531.5 1.0
Net Exports -535.6 -525.2 -10.4
Govt. Purchases 1924.7 1924.4 0.3
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REAL GROSS DOMESTIC PRODUCT (SEASONALLY
ADJUSTED ANNUAL RATES, 2000 CHAINED DOLLARS)
Year Q1 Q2 Q3 Q4
----------------------------------------
2004 3.9% -- -- --
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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