Friday, May 22, 2009
First quarter GDP fall confirmed at 1.9%
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

Recent GDP figures may be revised in time but it was too early to expect any change yet. Indeed, given the recent history of the data, it was perhaps a relief that there was no downward revision. The latest figures confirm the first quarter GDP fall at 1.9%, a drop of 4.1% on a year earlier. Inventories contributed about a third of the fall - over the past two quarters they have accounted for two-thirds of the GDP drop - but the decline was fairly broadly-based, government spending providing the only real support.

It rose by 0.3% at a time when household spending dropped by 1.2%, investment fell by 3.8% and exports dropped by 6.1%. The good news is that the first quarter fall should be the biggest in this cycle. The bad news is that it takes time to move from a 1.9% quarterly fall back to growth. More here.