Advance GDP 2.3% vs 2.0 Consensus: Consumer Spending Weakens


GDP came in ahead of the Econoday consensus estimate of 2.0%. Spending on goods declined.

Despite tax cuts expected to boost consumer spending, the Advance GDP report shows consumer spending weakened.

The deceleration in real GDP growth in the first quarter reflected decelerations in PCE, residential fixed investment, exports, and state and local government spending. These movements were partly offset by an upturn in private inventory investment. Imports, which are a subtraction in the calculation of GDP, decelerated.

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Price Deflators

  • The GDP price deflator for the report was 2.0%.
  • The price index for gross domestic purchases increased 2.8 percent in the first quarter, compared with an increase of 2.5 percent in the fourth quarter.
  • The PCE price index increased 2.7 percent, the same increase as in the fourth quarter.
  • Excluding food and energy prices, the PCE price index increased 2.5 percent, compared with an increase of 1.9 percent in the fourth quarter.

Personal Consumption Expenditures

Real Personal Consumption Expenditures (PCE) rose 1.1%, the weakest since the second quarter of 2013. Spending on goods declined 1.1%.

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Real Final sales, the bottom-line measure of the economy was 1.9%.

Key Contributions to GDP

  • PCE: .73
  • Goods (a subset of PCE): -0.24
  • Services (a subset of PCE): 0.97
  • Fixed Investment: 0.76
  • Residential (a subset of fixed investment): 0.0
  • Change in Private Inventories: 0.43
  • Exports: 0.59
  • Imports: -0.39
  • Government Expenditures: 0.20

All in all, there were few surprises in the report. One standout is net exports at 0.20. GDPNow had exports at 0.55 and imports at -0.85, a net of -0.30.

Mike "Mish" Shedlock

Comments (4)
No. 1-4

No surprises. More of the same old slow growth, in spite of the “stimulative” tax cuts. Expect this continue through the rest of this year and in to next year as well, provided no shocks such as a trade war. On the trade front I expect NAFTA to be settled soon, so that will be one less worry.


Bring on the rate hikes!




Interesting set of data. Noteworthy is the fall in final sales as you pointed out. Also noteworthy is the confusion over the slowdown in spending against a background of rising wages and employment. These commentators are looking in the wrong direction. The top 5% spend as much as the bottom 80% and there spending is driven by asset bubbles. It is their fall in spending held back by the gyrations on the stock markets that is undermining spending and further falls in the markets will further soften GDP growth.

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