US first-quarter GDP pace revised downward to less than 2%

31 May 2012 17:20  [Source: ICIS news]

WASHINGTON (ICIS)--The US on Thursday revised downward its estimate of the nation’s first-quarter economic performance, saying that gross domestic product (GDP) grew at only a 1.9% annualised pace for the period, down from the earlier 2.2% measure.

That puts the US GDP performance in the first quarter more than a percentage point below the fourth-quarter 2011 figure of 3% and adds fuel to concerns that the nation’s economic recovery is slowing further.

In a normal economy, US GDP growth would be expected to be in the range of 3% to 3.5% on an annual basis.

In its updated report, the Department of Commerce said that it had to revise the first quarter GDP estimate downward because of access to more complete source data than was available when the department made its first estimate last month of the January through March economic performance.

The downward revision, said the department, was attributed to lower business investments in inventories, a further decline in spending by state and local governments, less consumer spending and an increase in imports.

Imports count as a negative in GDP performance measures.

The lower estimate of first quarter consumer spending – what the department calls personal consumption expenditures (PCE) – could signal further trouble for the US economy. Consumer spending accounts of as much as 70% of all commercial and industrial activity.

However, the department noted that while its estimate of first-quarter consumer spending had to be revised downward to a 2.7% growth rate, that pace of PCE expansion is still higher than the 2.1% level seen in the last quarter of 2011.

On the downside, growth in durable goods production slowed to 14.3% in the first quarter.

While that expansion rate is strong, it is slower than the fourth quarter 2011 pace of 16.1%, another hint that while the recovery is continuing, its pace is slackening.

The revised first quarter GDP estimate came a day before the Labor Department is to issue employment data for May.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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