WASHINGTON – Gross domestic product for the first quarter was unexpectedly revised lower to a 3.0% annualized growth rate as the consumer spending and business investment categories were revised down and inventory investment was revised up, the Commerce Department reported today.
Consumer spending, which accounts for about 70% of GDP, was revised lower to a 3.5% increase in the first quarter from the 3.6% gain originally reported last month. Less spending on electricity and gas was the largest contributor to the downward revision. It was still the largest gain in consumer spending since the first quarter of 2007.
Gross private domestic investment was revised lower to a 14.7% increase, down a percentage point from the advance GDP estimate. A downward revision to software spending pushed business spending lower.
The core personal consumption expenditures figure was unchanged from the advance reading of a 0.6% rise, and is the smallest increase on record dating back to 1959.
Economists expected GDP to be revised to 3.4% for the first quarter and for core PCE to remain at 0.6%, according to the median estimate from Thomson Reuters.
Corporate profits continued to surge in the first three months of the year. Profits from current production increased $81.4 billion, or 5.5%, in the first quarter following an 8.0% gain in the fourth quarter of 2009.
Inventory investment was revised up based on fresh data. The change in private inventories contributed 1.65 percentage points to GDP growth, revised higher from 1.57 percentage points in the first estimate.
The trade deficit was revised lower to $499.4 billion from $503.8 billion. Exports and imports were both revised higher to $1,729.3 billion and $2,228.7 billon respectively.
Government spending was revised lower to a decline of 1.9% from a 1.8% drop. State and local spending contracted 3.9%, larger than the 3.8% contraction initially reported.
