BLS: GDP falls 6.1% in the first quarter of 2009

[Slimprofits]

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.

[..]

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.0 percent in the first quarter, compared with a decrease of 3.9 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent in the first quarter, compared with an increase of 1.2 percent in the fourth. The federal pay raise for civilian and military personnel added 0.3 percentage point to the change in the first quarter gross domestic purchases price index.

Real personal consumption expenditures increased 2.2 percent in the first quarter, in contrast to a decrease of 4.3 percent in the fourth. Durable goods increased 9.4 percent, in contrast to a decrease of 22.1 percent. Nondurable goods increased 1.3 percent, in contrast to a decrease of 9.4 percent. Services increased 1.5 percent, the same increase as in the fourth.

http://www.bea.gov/newsreleases/nati...ewsrelease.htm

[TRake]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Real personal consumption expenditures increased 2.2 percent in the first quarter, in contrast to a decrease of 4.3 percent in the fourth. Durable goods increased 9.4 percent, in contrast to a decrease of 22.1 percent. Nondurable goods increased 1.3 percent, in contrast to a decrease of 9.4 percent. Services increased 1.5 percent, the same increase as in the fourth.

The market seems to be focusing only on the positive right now. I think that this PCE increase vs last quarter decrease may simply represent people looking for after Christmas deals rather than buying for Christmas.
This is just a thought.

[flintlock]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Taking advantage of deals, pent up demand, or spending income tax refunds even.

[np]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

I would think some Americans got tax refunds during this period so that probably added some boost.

[Slimprofits]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Consumers that refinanced mortgages might have had more for regular spending.

[Slimprofits]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Q1 spending also was boosted by the social security COLA adjustment.

This research note written by Michael Feroli at J.P. Morgan contains some important information to remember when the Q2 data is released by the BLS.

The Making Work Pay credit reduced withholding taxes for lower and middle-income households at the beginning of April. These tax credits are projected to boost disposable income by about $60 billion this year, with about $40 billion coming in the form of lower withholding and $20 billion coming as refunds after 2009 taxes are paid in 2010. The $40 billion, coming over 9 months, will boost disposable income by $4.5 billion per month starting in April, adding $13.5 billion to 2Q09 personal income. The Social Security Economic Recovery One-Time payment ($250) will be mailed to every Social Security recipient. The mailing should occur almost entirely in May and will add $13.7 billion to disposable income in that month. Together, these two provisions will add about $109 billion annualized to income in Q2. While this new support is only now getting under way, other government-related boosts to incomes have been in play since early in the year. Relative to previous years, non-withheld tax payments are down, and refunds are way up. In the first quarter, refunds were $29 billion larger than last year and payments were $12 billion lower. At an annualized rate, this added $166 billion to disposable incomes in Q1....Incomes also received support early in the year from a very large cost-of-living-adjustment (COLA) for social security recipients. Each January social security payments are adjusted to reflect the change in inflation in the year ending the previous September. Because of very high energy prices in the first three quarters of last year, the COLA adjustment in January was 5.8%, adding about $3 billion to monthly household income.

[..]

In terms of changes, over the next two to three months, most of the government income support programs either turn flat or negative. Beginning in the summer—barring a major change to policy—personal incomes will need to be supported by economic activity.

Uncle Sam frontloads 2009 US personal income support

[c1ue]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Don't forget this is a preliminary number.

The original Q4 2008 GDP number was slightly better: -6.2%

Any bets on whether Q1 2009 GDP will be adjusted up? :eek:

[bart]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Some alternate views of the actual GDP data and additional info, a.k.a. things that makes you want to go hmmm.


That 6.1% number is based on annualized numbers, in other words - 4 times the change rate from last quarter to this quarter.

Current or nominal GDP (no inflation adjustments, just "raw" ) this quarter - $14.075 trillion. Last year, same quarter it was $14.151 trillion. The drop was about $75 billion, for an annual change rate was -.5% (minus 1/2 of 1%)

Chained year 2000 based GDP (adjusted by the GDP deflator) this quarter - $11.341 trillion. Last year, same quarter it was $11.646 trillion. The drop was about $306 billion, for an annual change rate was -3.5%.

The data is from quarter ending 1/1/2009, so is almost 3 months old.

Using a slightly modified set of John Williams corrections instead of the GDP deflator, the drop in GDP for the full year ending 1/1/2008 was about $610 million (about a 7.8% drop), and is also about $300 million lower than the GDP as of year 2000.

[ax]

Re: BLS: GDP falls 6.1% in the first quarter of 2009

Don't forget this is a preliminary number.

The original Q4 2008 GDP number was slightly better: -6.2%

Any bets on whether Q1 2009 GDP will be adjusted up? :eek:

The original Q4 GDP number was -3.8%. It was so blatantly low that markets completely disregarded it. Interesting to note how market sentiment has changed as today's number was quite worse than the expected -4.7 to -5.1%. I wouldn't be shocked to see this revised up at all.