Real GDP in first quarter revised to show 0.6% increase

Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 0.6 percent in the first quarter of 2007, according to preliminary estimates released May 31 by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.5 percent.

The GDP estimates are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 1.3 percent.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and state and local government spending that were partly offset by negative contributions from private inventory investment, residential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the first quarter primarily reflected an upturn in imports, downturns in exports and in federal government spending, and a deceleration in PCE for non-durable goods that were partly offset by an upturn in equipment and software, a smaller decrease in residential fixed investment, accelerations in PCE for durable goods and in PCE for services, and a smaller decrease in private inventory investment.

Final sales of computers subtracted 0.04 percentage point from the first-quarter growth in real GDP after contributing 0.22 percentage point to the fourth-quarter growth. Motor vehicle output contributed 0.10 percentage point to the first-quarter growth in real GDP after subtracting 1.18 percentage points from the fourth-quarter growth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.6 percent in the first quarter, the same as in the advance estimate; this index increased 0.2 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.8 percent in the first quarter, compared with an increase of 2.4 percent in the fourth. About 0.2 percentage point of the first-quarter increase in the index was accounted for by the pay raise for federal civilian and military personnel, which is treated as an increase in the price index of employee services purchased by the federal government.

Real personal consumption expenditures increased 4.4 percent in the first quarter, compared with an increase of 4.2 percent in the fourth. Real non-residential fixed investment increased 2.9 percent, in contrast to a decrease of 3.1 percent. Non-residential structures increased 5.1 percent, compared with an increase of 0.8 percent. Equipment and software increased 2.0 percent, in contrast to a decrease of 4.8 percent. Real residential fixed investment decreased 15.4 percent, compared with a decrease of 19.8 percent.

Real exports of goods and services decreased 0.6 percent in the first quarter, in contrast to an increase of 10.6 percent in the fourth. Real imports of goods and services increased 5.7 percent, in contrast to a decrease of 2.6 percent.

Real federal government consumption expenditures and gross investment decreased 3.9 percent in the first quarter, in contrast to an increase of 4.6 percent in the fourth. National defense decreased 7.3 percent, in contrast to an increase of 12.3 percent. Non-defense increased 3.6 percent, in contrast to a decrease of 9.6 percent. Real state and local government consumption expenditures and gross investment increased 3.9 percent, compared with an increase of 2.7 percent.

The real change in private inventories subtracted 0.98 percentage point from the first-quarter change in real GDP, after subtracting 1.16 percentage points from the fourth-quarter change. Private businesses decreased inventories $4.5 billion in the first quarter, following increases of $22.4 billion in the fourth quarter and $55.4 billion in the third.

Real final sales of domestic product – GDP less change in private inventories – increased 1.6 percent in the first quarter, compared with an increase of 3.7 percent in the fourth.

Gross domestic purchases

Real gross domestic purchases – purchases by U.S. residents of goods and services wherever produced – increased 1.6 percent in the first quarter, compared with an increase of 0.8 percent in the fourth.

Gross national product

Real gross national product (GNP) – the goods and services produced by the labor and property supplied by U.S. residents – increased 0.4 percent in the first quarter, compared with an increase of 3.5 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $7.0 billion in the first quarter after increasing $29.4 billion in the fourth; in the first quarter, receipts increased $11.0 billion, and payments increased $18.0 billion.

Current-dollar GDP

Current-dollar GDP – the market value of the nation's output of goods and services – increased 4.7 percent, or $154.8 billion, in the first quarter to a level of $13,613.0 billion. In the fourth quarter, current-dollar GDP increased 4.1 percent, or $135.6 billion.

Read the full report and view all of the charts by clicking on the link below:

http://bea.gov/newsreleases/national/gdp/2007/pdf/gdp107p.pdf