The Third Estimate for Q1 GDP was a surprising downward revision to 1.8 percent from 2.4 percent in the Second Estimate, which was a slight downward revision from the 2.5 percent Advance Estimate. Both Investing.com and Briefing.com had forecast no change.
Here is an excerpt from the Bureau of Economic Analysis news release:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.
The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, real GDP increased 2.4 percent. With the third estimate for the first quarter, the increase in personal consumption expenditures (PCE) was less than previously estimated, and exports and imports are now estimated to have declined (for more information, see "Revisions" on page 3).
The increase in real GDP in the first quarter primarily reflected positive contributions from PCE, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, state and local government spending, and exports. Imports, which are a subtraction in the calculation of GDP, decreased. [Full Release]
Here is a look at GDP since Q2 1947 together with the real (inflation-adjusted) S&P Composite. The start date is when the BEA began reporting GDP on a quarterly basis. Prior to 1947, GDP was reported annually. To be more precise, what the lower half of the chart shows is the percent change from the preceding period in Real (inflation-adjusted) Gross Domestic Product. I've also included recessions, which are determined by the National Bureau of Economic Research (NBER).
Here is a close-up of GDP alone with a line to illustrate the 3.2 average (arithmetic mean) for the quarterly series since the 1947, with the latest GDP revisions, this number had been at 3.3 for 14 quarters, but slipped to 3.2 in Q2 of 2012. I've also plotted the 10-year moving average, currently at 1.7. The current GDP is now just a hair's breadth above that moving average.
Here is the same chart with a linear regression that illustrates the gradual decline in GDP over this timeframe.
And for a bit of political trivia, here is a look at GDP by party in control of the White House and Congress.
In summary, the Q2 GDP Third Estimate of 1.8 percent was a quite unexpected adjustment to the downside, with the mainstream consensus was that it would remain unchanged at the Second Estimate's 2.4 percent.
Source: Advisor Perspectives
