WASHINGTON (5/30/14)--Real gross domestic product (GDP)--the total output of goods and services produced in the United States--contracted at an annual rate of 1% in the first quarter, according to the Bureau of Economic Analysis (BEA), which updated its initial estimate of a 0.1% expansion.
The revised estimate, released Thursday, is based on "more complete source data" than the agency had last month, according to a BEA press release.
The step back, after real GDP had climbed 2.6% in the fourth quarter of last year, is the GDP's first contraction in three years.
"While not quantified in the release, the effects of the severe (winter) weather clearly reduced growth in the quarter," wrote Scott Hoyt, Moody's analyst (Economy.com May 29). "(Though) some of the activity was shifted to the second quarter, which is looking much stronger."
The contraction was driven by downturns in exports, private inventory investment, non-residential fixed investment, state and local government spending and residential fixed investment, according to the BEA.
Further, according to Moody's analysts, consumer spending slowed in the first three months of the year, while disposable income growth remained weak, corporate profits fell and gross domestic income declined.
Nearly two months into the second quarter, however, the slump seen in the beginning of the year may have already been broken.
With the horrific winter weather now but a memory, and as inventory accumulation growth has leveled, many expect activity to pick up considerably in the second quarter.
"As the impact of these factors fades, the strength of the underlying economy is increasingly evident," Hoyt said. "Real U.S. GDP growth is tracking above 3% in the current quarter."