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March 28, 2020

Contraction in First Quarter U.S. Economic Growth Less Ominous Than Feared Earlier

Washington – The contraction in U.S. economy in the first quarter was less ominous than expected earlier , according to the final estimates released by the Commerce Department.

The real gross domestic product, the value of the production of goods and services, decreased at an annual rate of 0.2 percent in Jan-March quarter as against 0.7 percent decline estimated previously. This compared with the 2.2 percent GDP growth in the fourth quarter of 2014.

The final estimate is based on more complete source data than available earlier and shows the exports decreased less than previous estimated, and personal consumption expenditure (PEC) and imports increased more.

The decline in the first quarter GDP reflects a deceleration in PEC and downturns in exports, in nonresidential fixed investment, and in state and local government spending what were partly offset by upturns in private inventory investment and in federal government spending and a deceleration in imports.

Consumer spending, that accounts for more than two-thirds of economic output,  increased 2.1 percent in the first quarter, down from an increase of 4.4 percent in the fourth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.6 percent in the first quarter, the same decrease as in the second estimate; this index decreased 0.1 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.1 percent, compared with an increase of 0.7 percent.

Real exports of goods and services decreased 5.9 percent in the first quarter, in contrast to an increase of 4.5 percent in the fourth quarter, ending December 31. Real imports of goods and services increased 7.1 percent, compared with an increase of 10.4 percent in the preceding quarter.

Real nonresidential fixed investment decreased 2.0 percent in the first, in contrast to an increase of 4.7 percent in the fourth. Investment in nonresidential structures decreased 18.8 percent, as against an increase of 5.9 percent. Investment in equipment increased 2.6 percent, compared with 0.6 percent. Real residential fixed investment increased 6.5 percent, compared with an increase of 3.8 percent.

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