29 June 2001, 16:41 US GDP-OVERVIEW
--US Q1 GDP revised to +1.2% vs 1.3%
--US Q1 final sales revised to +4.3% vs 4.4%
--US net exports added 0.7 pt to Q1 GDP vs +1.1 pt
--US Q1 consumer spending revised to +3.4% vs 2.9%
--US Q1 capital spending revised to +1.9% vs +2.1%
--US Q1 government spending revised to +4.8% vs +4.7%
--Q1 GDP price deflator revised to +3.2% vs +3.3%
--US net inventories subtract unrevised 3.0 pt from Q1 GDP
By Andrew Williams
Washington, June 29 (BridgeNews) - Softer net exports left the U.S.
economy weaker in the first quarter than previously thought, the
government announced Friday. Gross domestic product rose 1.2%, a notch
lower than both the previous official estimate and analysts' expectations.
"The small downward revision to real GDP reflected offsetting
revisions to net exports and to consumer spending," the Commerce
Department said.
U.S. net exports added 0.7 percentage point to the government's final
estimate of first-quarter GDP, compared with 1.1 points in the prior
report, released May 25.
However, an upward revision to consumer spending largely offset the
downward pull from trade. According to the latest data, personal
consumption expenditures grew at a 3.4% annual pace in the first quarter,
compared with the previously estimated 2.9%.
OTHER DETAILS
Capital spending was weaker than the 2.1% gain last reported, rising
1.9%.
The Federal Reserve cut interest rates this week, citing an ongoing
decline in corporate outlays as a key concern.
Business spending on structures grew at a 15.3% pace, after the 17.2%
last reported. Outlays for equipment and software fell at a 2.3% rate,
compared with the 2.6% rate in the previous estimate.
Government spending was slightly stronger in the latest report,
growing at a 4.8% rate, compared to 4.7% last time.
Inventory investment subtracted 3.0 percentage points from growth,
unchanged from the prior report.
Real final sales, which measure GDP excluding inventories, rose a
revised 4.3%, just below the 4.4% increase last recorded.
The economy, which has grown at least 4.0% in each of the past four
years, may not even manage half that rate this year and has been fading
since last summer. Most analysts link the deceleration to an unwinding of
outsized inventories and investment. High energy prices and a stock market
sell-off have also taken their toll.
The Federal Reserve has sought to combat the weakness by slashing the
federal funds interest rate 2.75 percentage points since January to
3.75%--the lowest level in 7 years.
Bush administration officials hope the easing of monetary policy and
lower taxes will boost the economy by the year-end, with Treasury
Secretary Paul O'Neill frequently noting that growth of less than 3.5% is
below potential.
INFLATION
The GDP price deflator rose at a 3.2% pace, down a notch from the
prior estimate. The consumer spending price index was unrevised at 3.2%,
while the core consumer spending price index was up 2.6%.
WHAT WAS EXPECTED
The BridgeNews survey of economists' estimates for GDP ranged from up
0.8% to up 1.4%. The final sales projections ranged from up 4.1% to up
4.4% with the consensus at up 4.4%. The PCE index was expected to fall
3.2%, while the price deflator was pegged at 3.3%.
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