United States GDP grew slightly more than initially expected in the first quarter of 2016, but durable goods orders fell in May, according to the most recent data from the Department of Commerce.
The United States economy grew more than initially expected in the first quarter of 2016, according to a “third” preliminary estimate issued today by the U.S. Commerce Department.
U.S. gross domestic product (GDP) – the broadest measure of a nation’s overall economic health – increased 1.1 percent, down from a 1.4 percent advance in the fourth quarter of 2015. Gross domestic product is a calculation of the value of the goods and services produced by a nation’s economy minus the value of the goods and services used up in production.
Although a 1.1 percent growth rate is less than awe inspiring, it’s still an improvement from Commerce’s second estimate released last month, which showed the economy increasing only 0.8 percent in Q1 2016. Further, the department’s initial estimate of just 0.5 percent GDP growth, released in April, would have been the slowest pace in two years.
The department’s Bureau of Economic Analysis said the tepid first quarter GDP growth was driven primarily by positive contributions from personal consumption expenditures, residential fixed investment, and state and local government spending, an increase in exports and a decrease in imports, which a subtraction in the calculation of GDP. Those impacts were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, and federal government spending.
Real exports of goods and services grew 0.3 percent in the first quarter, and imports slipped 0.5 percent, according to BEA. U.S. export growth has been held in check by a strong dollar, which makes U.S. exports more expensive and, therefore, less desirable abroad, as well as declining demand in China and Europe.
For the full year in 2015, U.S. GDP increased 2.4 percent – the same rate as in 2014.
Analysts have been working overtime in the last week following mass uncertainty caused by the United Kingdom’s decision to leave the European Union. The so-called “Brexit” vote is seen by some as a long-term risk to already-weak corporate outlays and exports, while others think it will be more of a speed bump once all is said and done.
“Consumer spending looks to be bouncing back fairly strongly,” Ryan Sweet, a senior economist at Moody’s Analytics Inc., who correctly projected the gain in GDP, said in an interview with Bloomberg. “The economy can weather the impact of Brexit.”
The median forecast of 71 economists surveyed by Bloomberg, which ranged from 0.8 percent growth to 1.2 percent, predicted a 1 percent increase in GDP.
Additional new data from Commerce regarding the U.S. manufacturing sector, however, was less positive.
New orders for durable goods in May fell 2.2 percent, or $5.3 billion, to $230.7 billion, according to an advance estimate from the U.S. Census Bureau. The decline follows revised increases of 3.3 percent and 1.9 percent in April and March, respectively, which were preceded by decreases in three of the previous four months.
January durable goods orders showed 4.3 percent growth, but came on the heels of a 4.6 percent decrease in December 2015 and a 0.5 percent decline in November. Orders in February fell another 3.1 percent.
Transportation equipment again led the May decrease, down 5.6 percent, or $4.8 billion, to $81.9 billion after two consecutive monthly increases.
U.S. economy continues to send mixed signals
