Friday, April 27, 2018

Q1 '18 GDP First Cut

Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the first quarter of 2018
(table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the
fourth quarter, real GDP increased 2.9 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data
that are incomplete or subject to further revision by the source agency (see “Source Data for the
Advance Estimate” on page 2). The "second" estimate for the first quarter, based on more complete
data, will be released on May 30, 2018.
Real GDP: Percent Change from Preceding Quarter
The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed
investment, personal consumption expenditures (PCE), exports, private inventory investment, federal
government spending, and state and local government spending.  Imports, which are a subtraction in
the calculation of GDP, increased (table 2).

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.

Current-dollar GDP increased 4.3 percent, or $211.2 billion, in the first quarter to a level of $19.97
trillion. In the fourth quarter, current-dollar GDP increased 5.3 percent, or $253.5 billion (table 1 and
table 3).

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 (table 4). 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 (appendix table A).


Personal Income (table 10)

Current-dollar personal income increased $182.1 billion in the first quarter, compared with an increase
of $186.4 billion in the fourth quarter. Decelerations in personal interest income, rental income, and
nonfarm proprietors' income were largely offset by accelerations in wages and salaries and in
government social benefits.

Personal current taxes decreased $40.1 billion in the first quarter compared with an increase of $50.1
billion in the fourth quarter.

Disposable personal income increased $222.1 billion, or 6.2 percent, in the first quarter, compared with
an increase of $136.3 billion, or 3.8 percent, in the fourth quarter. Real disposable personal income
increased 3.4 percent, compared with an increase of 1.1 percent.

Personal saving was $462.1 billion in the first quarter, compared with $379.8 billion in the fourth
quarter. The personal saving rate -- personal saving as a percentage of disposable personal income --
was 3.1 percent in the first quarter, compared with 2.6 percent in the fourth quarter.

The 2017 Tax Cuts and Jobs Act includes provisions that impact the personal income statistics in the
National Income and Product Accounts. For more information, see the Technical Note.


Hard to believe reduced state and local government spending given the weather across much of the CONUS. I’d bet we see a large increase when all the bills are added up. The PCE 1% also sounds like an accounting quirk given the previous quarter of 4%.
Okay. There’s your on topic post. Everybody can now return to the all politics channel.
 
 
 

46 comments:

Firemane said...

Generally good economic news. I'm pleasantly surprised to see the nudge up in savings rate in response to the take-home boost from the Tax Cut act. But, I'm skeptical it will last long.

Of course, as I understand it, savings is not part of the GDP calculation, so it will not boost the GDP (at least not until it gets spent at some future date).

Back in February I was expecting a 2.3 GDP for Q1 ... (but dropped my projection to 2.0 at the end of March). My current WAGs are:

Q1 - 2.0
Q2 - 2.4
Q3 - 1.3
Q4 - (0.3) ** begin recession **

Of course, this is anticipating a major slowdown in the number of jobs getting filled, due to lack of workers - coupled with increased job hopping. But, I am unaware of anyone out there actually on Recession watch at this point, (though there are some who note since the '80s, we've been on a "fairly" steady cycle of Recessions every 8-10 years).





Rob Dawg said...

> Generally good economic news. I'm pleasantly surprised to see the nudge up in savings rate in response to the take-home boost from the Tax Cut act. But, I'm skeptical it will last long.

Sometimes you are so smart you could be me. Wink.

I think we both know the "savings rate" is so imputed as to not really follow savings. It follows something useful "what's left over" but it isn't savings.

I truly appreciate your participation. When we agree but moreso when we do not. Thanks.

Rob Dawg said...

> My current WAGs are:

Q1 - 2.0
Q2 - 2.4
Q3 - 1.3
Q4 - (0.3) ** begin recession **


Those fighting for an election relevant recession and those pimping the long slow expansion would be a great spectator sport. Unfortunately we are all pawns in that game.

Rob Dawg said...

> (though there are some who note since the '80s, we've been on a "fairly" steady cycle of Recessions every 8-10 years).

Fed broke that. How broke? I'm afraid to find out. What i watch is the Federal debt service. Obama and into Trump we've gotten away with yuuuge debt increases only because debt service hasn't grown. That will not persist.

Cinco-X said...

Off to the doctor's office this afternoon... Getting old sucks

Lawyerliz said...

Landing at Chicago. Lining taxi.

Lawyerliz said...

I give it a year and a half.

Lawyerliz said...

Lonnng.

Rob Dawg said...

The kitchen is half destroyed. Not a low end Lexus either.

Lawyerliz said...

Cold
By my standards

Lawyerliz said...

Picture?

Cinco-X said...

With newspaper?

Firemane said...

Dawg,

Love the exchange of ideas, too.

As for "pimping" for an election relevant recession - note that my timing is such that it wouldn't hit until AFTER the mid-terms, and actually maximize the time for a recovery before the Presidential. In short, if the Dems could pick a time for a recession, what I'm predicting would be the absolute worst imaginable.

That aside - agreed that Fed machinations since 2007 create a never-never-been-there-land of uncertainty. You could be right. My thinking is that both the Fed and its detractors BOTH grossly over-value the actual impact on the economy of their meddling. But, that's just one man's opinion.

That said - while I do believe it has taken way too long for interest rates to begin rising - and "long term" we're better off with modest rates (as opposed to the 0% madness of the past decade), when the next recession does hit, the rates will be right back to 0% again.

As for the impact of the next recession, I think it will be a mild dip and slow recovery (like the 2000 R). So, like that one, it is likely to be hard to see in real time, (we might have alternating positive and negative GDP prints, even as U3 rises). I could see pundits arguing about whether its a recession at all.

If my vision of the next decade were to occur, it might be apt to call it The Malaise between World Slog 1 and World Slog 2.

By 2030 I can imagine conversations pining for the Good Old Days, when we could count on 2% GDP increases.

Lawyerliz said...

And I thought I was pessimistic. I think another year and a half before it fails off a cliff.

Firemane said...

Random thoughts on why GDP growth is a fraction of what it used to be, (double digit quarterly increases in the '50s, 6-7% ANNUAL increases commonly seen into the '80s).

Growth in GDP is governed by two factors: Increase in number of workers/consumers - plus increase in productivity of those workers.

1) Population growth as a % of population is way down. We simply aren't growing at the RATE we used to. (Almost no one looks at REAL GDP per Capita - but by that measure the trends are a lot steadier). Note: Just fyi, the year that annual growth in labor force peaked was 1979.

2) Women participation peak. From the 1960s - 2000, female participation was growing 2% for every 1% that male participation was dropping. This MASKED the fact that the P-rate was dropping due to life expectancy increases (was about 65 when WWII ended, around 85 today). And meant we were adding workers BEYOND population growth for 40 years.

3) Migration from manufacturing to service based economy. In 1950, our economy was roughly 51% service, 38% industrial, and 11% agricultural. Today it is closer to 78/20/2. Manufacturing and Agriculture by their nature produce more output with fewer people needed as innovation occurs. SERVICE, by its nature, doesn't, (at least not so easily). A hair cut today takes the same time and number of people as it did 100 years ago. That said - tech is starting to make headway into service jobs, but thus far, the progress is much slower. Until that picks up, producing GDP growth in productivity is simply not possible.

4) The retirement boom. Prior to 1950 "retirement" wasn't a thing, except for the uber-wealthy. With Life Expectancy at 65, and "retirement age" at 65, workers literally worked until death. So, the growing pool of retirees, relative to the working population was very small. Of course, over time, that has been shifting gradually, but 2011 was when the first Boomers actually hit 65. The Great Recession created a pull-forward, (and many were already taking advantage of the age 62 'early retirement' for SS bennies even before then) -- but it wasn't until 2011 that we actually hit the math that the number of retirees + deceased actually began outpacing the number of new workers entering the job market. (Thanks to the mass layoffs in the Great Recession, we had an extra 13 million or so 'surplus' workers to mask that reality back then).

5) The Housing Madness distorted GDP growth numbers of the early 2000s. The last time we had quarterly 4% GDP growth was in 2004. This was at the height of the housing madness. Since housing purchases are so large, then tend to have a significant pull on GDP, (both good and bad). It is likely that without the housing madness, we would NOT have had those 4% quarterly GDP prints that were normal in the '90s. (would've been in the 3s).

==================

So, it this permanent?

No. In 2029, the last of the Boomers retire. The demographics already show the tide turning regarding new workers, (the young cohorts are some of the largest). BUT, relative to the total labor force (and minus the retirees), it's still not nearly as rosy a picture as things were from 1950-2000.

I see another 10 years of "Slog", (continued 1-2% GDP growth), and around 2030, as the Boomers start dying faster than retiring, advances in AI will probably just be getting to the point to make measurable headway into Service arena productivity - and 4% GDP gains will at least be plausible.


Lawyerliz said...

All the service personel in Chicago are from somewhere else, except one. One from a place where names have a lot of zzs, could t understand me and vice versa. All the rest pleasant and. Competent. Indians are usually legal. So a source of workers is there. And I think u6 ers can be a sourse. And black people could have a lower unemplotment rate. We could take money from the top 0.5% and all get raises.

Lawyerliz said...

The top doesn't spend a proportionate amount of money.

Lawyerliz said...

Checked the top 10%; we arent quite there, but I think with no house payment, car payment or needed savings for college, we qualify. IMO.

Lawyerliz said...

I don't want an ai to cut my hair or give me a massage, or jiggle my new Grandson. To do the dishes, yes. To wash the kitchen floor and clean the toilets, yes.

nevnej said...

Migration from manufacturing to service based economy.

I also wonder about structural changes and how they affect our understanding of the economy and interpretation of variables. Does contracting out artificially increase gdp? Is gdp growth becoming less capital intensive? Facebook and google revenues don't rely on a lot of physical capital. Scaling up does not cause overheating due to resource needs.

Jim the Realtor said...

>>>when the next recession does hit, the rates will be right back to 0% again.

Agreed - rising rates just build a buffer for the next time around. They figure that 3.5% mortgage rates will fix anything. They did last time.

Cinco-X said...

2% GDP? 4% GDP? Who cares? It all goes into the pockets of the wealthy. I'd be glad to tolerate 1% declines if we'd see some heads on pikes and some "redistribution" of their wealth...

LBD said...

Good Morning!

High mortgage rates could lower house prices. IMO

Lawyerliz said...

Yep, kinda.

Lawyerliz said...

Good morning. Shower for dil today.
Hub's 75 birthday.

LBD said...

HBD to Hub! I hit 67 next week. I didn't think I was going to see 55. Medicine is not expensive, it's priceless! :)

Lawyerliz said...

Yep. I'm in Chicago which is berry very expensive. Breakfast buffet nearly $20.00. I can afford it, but I don't want to. Gas high, hotel.nice, but high.

Lawyerliz said...

Well, now taxpayers pay for most of it.

Thanks taxpayers! I was you, once.
My mom lived to 92, and didn't want to die. Her grand dad lived to 86, which was very older the, and died of something that can prolly be cured now. May dad is rumoured to have died at 83, in spite of heavy smoking and drinking. Hub had 2 aunts who lived to 97. His dad lived to 84 despite heavy smoking.

Lawyerliz said...

The hub has a white.forelock, the rest is dark brown with about 10 white hairs. A reverse Leno. He likes it.

Lawyerliz said...

He won a prize for original poetry. My recitation of Sea Fever went over big.

Lawyerliz said...

How about hark, hark the beggers are
coming to town.
Some in rags, and some in jags. . . .
And one. . In a velvet gown. (In a sinister voice. . .

LBD said...

I am hearing get to work that retaining wall won't build it's self. :)

Rob Dawg said...

The dishwasher has done its last fork and dish. The oven is self cleaning and headed to Craigslist for $110. The kittehs are not pleased.

Rob Dawg said...

Going to see “Infinity War” this afternoon. Should be over the top escapism. Should set records for cameos, star turns, makeup (pounds of), CGI density, dollars per pixel.

Lawyerliz said...

Why?their world is changing? Cat's do like the home and human to stay the same

Lawyerliz said...

What about the wife?

Lawyerliz said...

As the debt and recession. The debt will NEVER be paid off. It will stay there until civilization falls, which will not happen for a while, I hope

Which reminds me, did some thing happen with Greece? Or msm got tired of it?

Rob Dawg said...

Mrs Dawg is excited about a new kitchen.
Kittehs are just upset at change.
Should be an empty shell tomorrow.

Infinity Wars was unrelenting. Unfortunately I cannot tell you why it sucked without major spoilers. Equally unfortunate the next installment is going to be a long depressing trek for a payoff that was already signaled.

TJandTheBear said...

Okay, now for a different take...
--
Both (a) new debt required to create GDP and (b) EROEI are rising to the point of unsustainability, at least for the world as currently configured. The next "recession" won't resemble any that came before, and nobody's ready for it because nobody knows exactly what form it'll take. I'm just hoping it unfolds slowly and doesn't involve major armed conflicts.

Oh, and that great savior "technology" has so far only managed to maximize the exploitation of current energy sources while failing spectacularly to develop new ones. Hope for the best, prepare for the worst.
--
Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind. JFK


Cinco-X said...

Government debt is the underlying capital that is the basis got banks to be able to create money. A certain amount is a good thing, and paying it off would destroy the current monetary regime. People that want to pay off the debt are delusional about what it is...

Cinco-X said...

You seem to understand money

Lawyerliz said...

Hamilton thought it was wonderful.

Lawyerliz said...

I saw the trailer of the movie.
Didn't impress me.

Lawyerliz said...

The fire alarm went off in the middle of the nights
Then it went off. Nobody explained, nobody in hall. I fell back to sleep and dreamed that aliens did it. 👽👿👺😱

LBD said...

Good Morning!

From the street view we where broke when we left the gold standard. Debt means little to the spend junkie as long as the world buys it. Question is do we go on at this point or call the game over and everybody loses. Glitches even all out fraud has been covered by kiting treasuries.

Rob Dawg said...

New post. Liz finally gets a kitchen picture.