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| First-Quarter 2006 GDP - Preliminary Estimate (#1) - May. 25, 2006 |
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Summary
Earlier this morning, the Commerce Department released its second
("preliminary") estimate of first-quarter 2006 gross domestic product, indicating real growth at an annual rate of 5.3%. This compared with the 4.8% rate reported at the end of April.
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* The Commerce Department's "preliminary" estimate of first-quarter 2006 gross domestic product indicated real growth during the period at a 5.3% annual rate. This represented a moderate increase from the 4.8% rate that was estimated at the end of April, and it compared with a 1.7% rate of growth during last year's fourth quarter.
* Measured in nominal (pre-inflation) terms, first-quarter 2006 GDP rose at a 8.8% rate, up sharply from the 5.2% rate of nominal growth during last year's fourth quarter. Year over year, first-quarter nominal growth came in at 6.9%.
* Measured on a 1Q2006-over-1Q2005 basis, real GDP grew by 3.6%.
* The consensus estimate for real first-quarter growth anticipated something around a 5.8% annual rate, somewhat stronger than the 5.3% rate actually reported.
* The higher 5.8% estimate would have resulted in an increased GDP dollar amount of roughly $26.6 billion, versus the actual $13.3 billion increase shown in today's report. Higher inventory accumulation totaling $10.4 billion, coupled with a $8.3 billion reduction in the reported drag from the trade deficit, were equal to almost 141% of the total upward revision.
* The inordinate contributions from inventories and from trade to the overall increase were highly consistent with the suspicions I expressed in today's earlier missive. Therefore, the "quality" of the economy's increased first-quarter strength as reported today is at least somewhat suspect.
* Today's report continued to show the "stagflationary" mix to the overall numbers that has been in evidence over the last several quarters.
I will soon publish a more detailed examination of today's release.
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