GDP RISES ONLY 2.5%, MISSES WALL STREET'S EXPECTATIONS

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The first estimate for first quarter U.S. GDP is out.

The U.S. economy expanded 2.5% in the first quarter, below expectations for 3.0% growth.

However, personal consumption growth was 3.2 percent, better than expectations for 2.8% growth.

Below is the full text from the release.

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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 2.5 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 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 the box on page 3 and  "Comparisons of Revisions to GDP" on page 5). The "second" estimate for the first quarter, based on  more complete data, will be released on May 30, 2013.

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

BEA plans to release the results of the 14th comprehensive (or benchmark) revision of the national  income and product accounts (NIPAs) in conjunction with the second quarter 2013 "advance" estimate  on July 31, 2013. More information on the revision is available on BEA’s Web site at  www.bea.gov/gdp-revisions, including a link to an article in the March 2013 issue of the Survey of  Current Business that discusses the upcoming changes in definitions and presentations, including  capitalizing spending on research and development and on entertainment originals and measuring  transactions of defined benefit pension plans on an accrual accounting basis. An article in the May  Survey will describe changes in statistical methods, and an article in the September Survey will describe  the estimates in detail. Revised NIPA table stubs and news release stubs will be available in June.

Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2005) dollars. Price indexes are chain-type measures.

This news release is available on www.bea.gov along with the Technical Note and highlights related to this release.

The acceleration in real GDP in the first quarter primarily reflected an upturn in private  inventory investment, an acceleration in PCE, an upturn in exports, and a smaller decrease in federal  government spending that were partly offset by an upturn in imports and a deceleration in nonresidential  fixed investment.

Motor vehicle output added 0.24 percentage point to the first-quarter change in real GDP after adding 0.18 percentage point to the fourth-quarter change. Final sales of computers subtracted 0.01 percentage point from the first-quarter change in real GDP after adding 0.10 percentage point to the fourth-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,  increased 1.1 percent in the first quarter, compared with an increase of 1.6 percent in the fourth.  Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in  the first quarter, compared with an increase of 1.2 percent in the fourth.

Real personal consumption expenditures increased 3.2 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 8.1 percent, compared with an increase of 13.6 percent. Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent.

Services increased 3.1 percent, compared with an increase of 0.6 percent.

Real nonresidential fixed investment increased 2.1 percent in the first quarter, compared with an increase of 13.2 percent in the fourth. Nonresidential structures decreased 0.3 percent, in contrast to an increase of 16.7 percent. Equipment and software increased 3.0 percent, compared with an increase of 11.8 percent. Real residential fixed investment increased 12.6 percent, compared with an increase of 17.6 percent.

Real exports of goods and services increased 2.9 percent in the first quarter, in contrast to a decrease of 2.8 percent in the fourth. Real imports of goods and services increased 5.4 percent, in contrast to a decrease of 4.2 percent.

Real federal government consumption expenditures and gross investment decreased 8.4 percent  in the first quarter, compared with a decrease of 14.8 percent in the fourth. National defense decreased  11.5 percent, compared with a decrease of 22.1 percent. Nondefense decreased 2.0 percent, in contrast  to an increase of 1.7 percent. Real state and local government consumption expenditures and gross  investment decreased 1.2 percent, compared with a decrease of 1.5 percent.

The change in real private inventories added 1.03 percentage points to the first-quarter change in  real GDP after subtracting 1.52 percentage points from the fourth-quarter change. Private businesses  increased inventories $50.3 billion in the first quarter, following increases of $13.3 billion in the fourth  quarter and $60.3 billion in the third.

Real final sales of domestic product -- GDP less change in private inventories -- increased 1.5  percent in the first quarter, compared with an increase of 1.9 percent in the fourth.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever  produced -- increased 2.9 percent in the first quarter; it was unchanged in the fourth quarter.

Disposition of personal income

Current-dollar personal income decreased $109.1 billion (3.2 percent) in the first quarter, in  contrast to an increase of $262.3 billion (8.1 percent) in the fourth. The downturn in personal income  primarily reflected a sharp downturn in personal dividend income and a sharp acceleration in  contributions for government social insurance -- a subtraction in the calculation of personal income.

Fourth-quarter personal dividend income was boosted by the payment of accelerated and special  dividends. The acceleration in contributions for government social insurance in the first quarter resulted  from the expiration of the "payroll tax holiday."

Personal current taxes increased $27.2 billion in the first quarter, compared with an increase of
$34.3 billion in the fourth.

Disposable personal income decreased $136.3 billion (4.4 percent) in the first quarter, in contrast  to an increase of $228.0 billion (7.9 percent) in the fourth. Real disposable personal income decreased  5.3 percent, in contrast to an increase of 6.2 percent.

Personal outlays increased $116.3 billion (4.1 percent) in the first quarter, compared with an  increase of $97.0 billion (3.4 percent) in the fourth. Personal saving -- disposable personal income less  personal outlays -- was $313.3 billion in the first quarter, compared with $566.0 billion in the fourth.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was  2.6 percent in the first quarter, compared with 4.7 percent in the fourth. For a comparison of personal  saving in BEA’s national income and product accounts with personal saving in the Federal Reserve  Board’s flow of funds accounts and data on changes in net worth, go to  www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased  3.7 percent, or $146.1 billion, in the first quarter to a level of $16,010.2 billion. In the fourth quarter,  current-dollar GDP increased 1.3 percent, or $53.1 billion.

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