GDP Contracted 5.7%
Less inventory liquidation and a smaller drop in exports were factors in the adjustment up from the originally estimated 6.1% GDP drop. Economists surveyed by Dow Jones Newswires had expected first-quarter GDP would be revised to a 5.5% decline. The inventory revision, while a plus for first-quarter GDP growth, implies a bigger overhang to be worked off in the current, second quarter.
The 5.7% GDP drop was smaller than the 6.3% tumble GDP took in the fourth quarter, bolstering the case the recession hit the nadir about a year after its December 2007 debut.
A leading panel of economists this week predicted GDP will fall only 1.8% in the second quarter, which runs April through June. The National Association of Business Economics forecasters see GDP growing in the third quarter, rising an anemic 0.7%, and projects a fourth-quarter increase of 1.8%.
Friday's GDP data showed corporate profits after taxes increased by 12.9% to $1.052 trillion in the first quarter, after plunging by 28.4% in the fourth quarter. Year-over-year, profits were down 22.0%.
Price inflation gauges were generally unchanged in the government report on revisions to GDP.
GDP is a measure of all goods and services produced in the economy. Its biggest component is consumer spending. First-quarter spending by consumers advanced 1.5%, down from a previously reported 2.2% increase but above the fourth quarter's 4.3% drop. It contributed 1.08 percentage points to GDP in the first quarter.
Purchases of durable goods rose 9.6% in January through March, above the previously reported 9.4% increase and above a 22.1% drop in the fourth quarter. Durable goods are expensive items designed to last at least three years, such as cars.
First-quarter non-durables spending fell by 0.6%. Services spending went 1.3% higher.
The report showed businesses decreased inventories in the first quarter, a decline of $91.4 billion. Originally, Commerce estimated a $103.7 billion decrease. Companies had lowered stocks $25.8 billion in the fourth quarter. The drawdown of goods in the first quarter reduced GDP during that period by 2.34 percentage points -- about 40% of the overall, 5.7% GDP drop. Originally, Commerce had said inventories reduced GDP by 2.79 percentage points.
The 5.7% GDP drop was smaller than the 6.3% tumble GDP took in the fourth quarter, bolstering the case the recession hit the nadir about a year after its December 2007 debut.
A leading panel of economists this week predicted GDP will fall only 1.8% in the second quarter, which runs April through June. The National Association of Business Economics forecasters see GDP growing in the third quarter, rising an anemic 0.7%, and projects a fourth-quarter increase of 1.8%.
Friday's GDP data showed corporate profits after taxes increased by 12.9% to $1.052 trillion in the first quarter, after plunging by 28.4% in the fourth quarter. Year-over-year, profits were down 22.0%.
Price inflation gauges were generally unchanged in the government report on revisions to GDP.
GDP is a measure of all goods and services produced in the economy. Its biggest component is consumer spending. First-quarter spending by consumers advanced 1.5%, down from a previously reported 2.2% increase but above the fourth quarter's 4.3% drop. It contributed 1.08 percentage points to GDP in the first quarter.
Purchases of durable goods rose 9.6% in January through March, above the previously reported 9.4% increase and above a 22.1% drop in the fourth quarter. Durable goods are expensive items designed to last at least three years, such as cars.
First-quarter non-durables spending fell by 0.6%. Services spending went 1.3% higher.
The report showed businesses decreased inventories in the first quarter, a decline of $91.4 billion. Originally, Commerce estimated a $103.7 billion decrease. Companies had lowered stocks $25.8 billion in the fourth quarter. The drawdown of goods in the first quarter reduced GDP during that period by 2.34 percentage points -- about 40% of the overall, 5.7% GDP drop. Originally, Commerce had said inventories reduced GDP by 2.79 percentage points.
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