Upward Q1 Revision to Real GDP

By Thomas Cooley and Peter Rupert

Today’s release of the 2nd estimate for Q1 GDP from the BEA brought a large increase, nearly double, in real GDP, compared to the advance estimate. The revised real GDP growth is 1.2% in the first quarter while it was 0.7% in the advance estimate. The positive revision has been a feature of first quarter estimates for several years and has sparked a lot of attention to the  seasonal adjustment.   There were significant revisions to final sales and some modest downward revisions to inventories. In addition, real personal consumption expenditures only grew at 0.6% (but were revised up from 0.3%), the weakest growth in over 5 years. .

There were downward revision to Q4 income growth which pushed the savings rate lower. Most of the markets’ attention was focused on the April report on durable goods issued this morning as well. It was very soft and some of the details were disappointing.



Both residential and non-residential fixed investment showed strong growth in the quarter, gaining 13.8% and 11.4%, respectively.


At the moment, the revised estimates will not do much to change the current thinking as to the state of the economy. The revision was a bit higher than expectations by many forecasters. We are just going to have to wait a little longer to see how the economy evolves as we near mid year. The Atlanta Fed’s GDPNow has revised down its forecast for Q2, from 4.1% to 3.7% after some of the latest releases, including today’s GDP and durable goods…still, 3.7% would be a very welcome outcome!


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