The Third Estimate of 1st Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services contracted at a 0.2% annual rate in the 1st quarter, revised from the 0.7% contraction rate reported in the second estimate last month.
If is official. It happened. First quarter 2015 real GDP just went negative with a -0.7% contraction. Remember folks, two consecutive quarters of negative growth can make up an official recession. In reality the revision is a one percentage point slide. Psychologically speaking, contraction isn't too swift as it often pricks bubble minds that blow hot air all over as they deflate. The reason for the negative revision is imports.
The Durable Goods, advance report shows new orders declined by -0.5% in April. In March new orders increased 5.1% yet in February, new orders dropped by -3.5%. For April, transportation was the culprit as new orders in this category dropped -2.5%. Core capital goods, on the other hand, gained 1.0%. Without transportation new orders, which includes aircraft, durable goods new orders would have increased by 0.5%.
First quarter 2015 real GDP is a measly, pathetic 0.2%. That's quite disappointing, and just shavings and crumbs away from contraction. Consumer spending was less than half of the contribution Q4 brought and exports imploded. While some think this is a report to ignore, that economic growth will spring back, we think this is quite a foreboding of bad news.
The 3rd estimate of 4th quarter GDP indicated that our output of goods and services in the last three months of the year grew at a 2.2% annual rate from the 3rd quarter, which was unchanged from the 2nd GDP estimate.
Fourth quarter 2014 real GDP was revised 0.4 percentage points lower to 2.2%. That's quite disappointing, although still mediocre growth. The reason for the revision reduction was inventories did not grow nearly as much as originally estimated and imports increased. Real consumer spending was barely revised. Overall Q4 GDP cutting isn't that surprising, more Q3 GDP's lack of trade deficit impact was.
The Durable Goods, advance report shows new orders declined by -3.4% for December 2014. This month the decline was caused by volatile aircraft and parts. Core capital goods also dropped by -0.6%. For the last three of four months durable goods new orders as a whole have declined. Without transportation new orders, which includes aircraft, the durable goods decline would have been -0.8%.
Third quarter 2014 real GDP was revised up even further to a whopping 5.0%. Merry Christmas Wall Street as the Dow closed above 18,000, a record high. This is the highest quarterly GDP since Q3 2003, a full eleven years ago. The reason for the revision blow out was consumer spending and investment. Real consumer spending was revised up almost 3/4th of a percentage point more than the first revision previously reported.
The Census released the monthly construction spending report today. Spending was $971 billion in October, up +1.1% from September and an increase of +3.3% from October 2013. This is a rebound from last month with the largest gain in five months. September was revised upward from -0.4% to -0.,1%. For just 2014, spending has increased 5.8%.
Third quarter 2014 real GDP was revised upward to 3.9% from the original 3.5%. The reason was investment, as changes in private inventories were revised sharply upward. Consumer spending was also stronger by over a quarter of a percentage point and also bumped up the revision. Imports were revised upward and exports downward which subtracted from economic growth. Overall Q3 GDP was surprisingly strong in this Turkey surprise.
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