The third look at Q1 2019 growth
- Second estimate was +3.1% q/q annualized
- Personal consumption vs +1.3% in 2nd estimate
- Core PCE +1.2% vs +1.0% expected
- GDP price index 1.0% vs +0.8% expected
- Q4 was 2.2% after initially printing 2.6%
- Q3 was 3.4%
- GDP final sales +2.6% vs +2.5% initially
Details:
- Personal consumption +0.9% vs +1.3% in 2nd estimate
- Q4 personal consumption was +2.5%
- Consumer spending on durables -2.3% vs -4.6% in 2nd estimate
- Business investment +4.4% vs +2.3% in 2nd estimate
- Business investment on equipment -1.0% (unchanged)
- Business investment on IP/software +12.0% vs +7.2% prior
- Home investment -2.0% vs -3.5% in 2nd estimate
- Exports +5.4% vs +4.8% in 2nd estimate
- Imports -1.9% vs -2.5% initially
The consumer was a bit weaker than believed and that will raise some worries about Q2 and the health of the economy. At he same time, consumer spending on durables wasn't as weak, so that's a better sign. That drop was balanced out by a jump in business investment, especially in the IP/software side, which added 0.55 pp to GDP.
Aside from the consumer I don't see much that's going to change views on Q2. Looking at the above chart, it's amazing that we're talking about a near-term rate cut. The higher inflation revisions should be an argument against it.
Contributions:
- Consumption added 0.62 pp
- Net trade added 0.94 to GDP vs 0.96 pp in 2nd estimate
- Business inventories add 0.55 vs 0.6 pp in 2nd estimate
- Government consumption added 0.48 pp
- Q1 corporate profits after tax -3.5%