The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter primarily reflected a deceleration in private inventory investment and a downturn in nonresidential fixed investment that were partly offset by accelerations in exports.
The GDP report was weaker than expected, however, on the bright side, final end demand was good. Personal consumption expenditures increased at a 2.9% annual rate in the first quarter, and residential investment increased at a 19.1% annual rate. Weather probably provided a boost to GDP. However, growth at this rate is not sustainable longer term without more personal income growth.
