GDP revised down as residential investment falls

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Real gross domestic product was revised down once again to an annual rate of 2% as residential investment fell in the first quarter of 2018, according to the third and final estimate released by the U.S. Bureau of Economic Analysis.

The second estimate revised GDP growth to 2.2% in the first quarter, down from 2.3% in the first estimate. This also represents a drop from 2.9% in the fourth quarter.

Today’s GDP estimate is based on more complete source data than was available for the second estimate issued in May.

The third estimate for the first quarter reveals that economic growth has remained relatively the same.

The chart below shows this drop brings GDP down nearly one percentage point from the fourth quarter, however it still remains up from the first quarter of 2017.

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GDP: June 28

(Source: BEA)

Real gross domestic income increased 3.6% in the first quarter, up from an increase of 1% in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.8% in the first quarter, up from an increase of 2% in the fourth quarter.

The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed investment, personal consumption expenditures, exports, federal government spending and state and local government spending.

These were partly offset by a negative contribution from residential fixed investment and private investment.

The change in real GDP was revised down 0.2 percentage points from the second estimate, which reflects downward revisions to private inventory investment, personal consumption expenditures and exports that were partly offset by an upward revision to nonresidential fixed investment.

Here are updates to the previous estimate:

Real GDP: Decreased to 2%, down from last estimate’s 2.2%

Current-dollar GDP: Remained unchanged at 4.2%

Real GDI: Increased to 3.6%, up from 2.8%

Average of Real GDP and Real GDI: Increased to 2.8%, up from 2.5%

Gross domestic purchases price index: Remained unchanged at 2.7%

Personal consumption expenditures: Decreased to 2.5%, down from 2.6%

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