Recent Updates

  • Flash PMI: France, Germany, Euro Area (Sep); Manufacturing Survey - US (Sep); Composite Survey - US (Sep); Services Survey - US (Sep)
  • Canada: CPI (Aug), Retail Trade (Jul)
  • Investment in Fixed Assets (Aug)
  • Mauritius: PPI (Q2); Lebanon: CPI (Aug); Morocco: CPI (Aug)
  • France: GDP, Consumer Credit (Q2-Final)
  • Labor & Export Surveys (Sep)
  • Mexico: GDP by Expenditure (Q2), Semimonthly CPI (Sep);
  • more updates...

Economy in Brief

U.S. GDP Growth Revised Up, But Corporate Profits Decline
by Tom Moeller  May 26, 2017

Economic growth was revised to 1.2% during Q1'17, up from the advance estimate of 0.7%. Growth remained the weakest in three quarters. A 0.8% advance had been expected in the Action Economics Forecast Survey. Raised estimates of consumer spending and business investment accounted for the revision.

After-tax corporate profits without IVA & CCA declined 0.3% (+11.9% y/y) following four quarters of strong increase. Before-tax profits with IVA & CCA fell 1.9% (+3.7% y/y). Nonfinancial sector earnings declined 1.6% (-5.6% y/y). Earnings in the financial sector fell 5.5% (+12.3 y/y) while foreign sector earnings improved 1.4% (24.6% y/y).

Growth in personal consumption expenditures was increased to 0.6% from 0.3%, but it remained the weakest advance since a slight decline in Q4'09. Growth was held back by a lessened 1.4% decline (+7.7% y/y) in durable goods spending which followed three straight quarters of 9%-to-12% growth. Motor vehicle outlays declined a lessened 13.9% (+6.9% y/y) and reversed most of the Q4 jump. Offsetting this decline was a raised 13.2% surge (12.9% y/y) in recreational goods & vehicle consumption and a little-changed 2.9% gain (5.6% y/y) in home furnishings & appliances purchases. Nondurable goods outlays increased a lessened 1.2% (2.4% y/y), a gain held back by a smaller 7.3% decline in spending (-2.9% y/y) on energy products. Clothing outlays also fell an unchanged 5.1% (-0.4% y/y), but food purchases rose a reduced 3.1% (4.9% y/y). Growth in services purchases of 0.8% (2.2% y/y) was revised a bit higher, but still restrained by a 1.5% decline (+1.0% y/y) in housing & utilities outlays. Health care outlays rose a smaller 0.9% (3.5% y/y) while recreation spending increased a strong and little-changed 3.8% (2.0% y/y). Restaurant & hotel spending rose a still strong 2.9% (1.9% y/y).

Business fixed investment rose a strengthened 11.4% (3.6% y/y) versus the initial estimate of a 9.4% gain, following a 0.9% Q4 rise. Structures investment surged 28.3% (8.4% y/y), after declining during all of 2015 and 2016. Producers durable equipment outlays increased a lessened 7.2% (0.3% y/y), only the second increase since Q3'15. Industrial equipment outlays gained a softened 7.8% (4.8% y/y). Information processing equipment investment rose a lessened 12.5% (5.0% y/y) and intellectual property product investment gained a strengthened 6.7% (3.8% y/y). Residential investment surged 13.7% (2.4% y/y), which was unrevised.

A reduced rate of inventory investment sapped slightly more than 1.0 percentage points from overall economic growth. That was upwardly revised and reversed the Q4'16 addition. A 0.2 percentage point contribution to growth from the foreign trade sector also was more than estimated initially reflected an little-changed 5.9% rise in exports (3.1% y/y) and a lessened 3.8% growth in imports (3.7% y/y).

The decline in government sector outlays was lessened to 1.1% (-0.5% y/y), but spending still fell to the lowest level since Q3'15. Federal government investment declined a little-changed 2.1% (-0.3% y/y), led by a 3.9% drop (-2.2% y/y) in defense spending. Nondefense purchases improved 0.6% (2.4% y/y). State & local government spending fell 0.6% both q/q and y/y.

The gain in the chain-type GDP price index was lessened to 2.2%, but remained the fastest rate of growth in three quarters. A 2.3% rise was expected. The PCE price index advanced 2.4%, the quickest rate of increase since Q2'11. The business fixed investment price index rose a lessened 1.3% (0.9% y/y), the swiftest rise since Q2'14. Growth in the residential investment price index slowed to an increased 1.8% (4.5% y/y), the slowest growth since Q2'15.

The GDP figures can be found in Haver's USECON and USNA database. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts, including the integrated economic accounts and the recently added GDP data for U.S. Territories. The Action Economics consensus estimates can be found in AS1REPNA.

Chained 2009 $ (%, AR) Q1'17 (Second Estimate) Q1'17 (Advance Estimate) Q4'16 Q3'16 Q1'17 Y/Y 2016 2015 2014
Gross Domestic Product 1.2 0.7 2.1 3.5 2.0 1.6 2.6 2.4
  Inventory Effect -1.0 -0.9 1.0 0.5 -0.2 -0.4 0.2 0.0
Final Sales 2.2 1.6 1.1 3.0 2.2 2.0 2.4 2.5
  Foreign Trade Effect 0.2 0.1 -1.7 0.9 -0.1 -0.1 -0.7 -0.1
Domestic Final Sales 2.0 1.5 2.8 2.1 2.3 2.1 3.1 2.6
Demand Components
  Personal Consumption Expenditures 0.6 0.3 3.5 3.0 2.8 2.7 3.2 2.9
  Business Fixed Investment 11.4 9.4 0.9 1.4 3.6 -0.4 2.1 6.0
  Residential Investment 13.7 13.7 9.6 -4.1 2.4 4.9 11.7 3.5
  Government Spending -1.1 -1.7 0.2 0.8 -0.5 0.9 1.8 -0.9
Chain-Type Price Index
  GDP      2.2 2.3 2.1 1.4 2.0 1.3 1.1 1.8
   Personal Consumption Expenditures 2.4 2.4 2.0 1.5 2.0 1.1 0.3 1.5
     Less Food/Energy 2.1 2.0 1.3 1.7 1.7 1.7 1.4 1.6
close
large image