June 29, 2020
Real gross domestic product (GDP) declined at an annual rate of 5% for the first quarter of 2020 according to the third estimate released by the Bureau of Economic Analysis (BEA). However, for the fourth quarter of 2019, real GDP had a 2.1% growth.
The downward movement in real GDP for the first quarter reflected negative contributions from personal consumption expenditures (PCE), non-residential fixed investment, exports, and private inventory investment. This movement was partly offset by positive contributions from residential fixed investment federal government spending, and state and local government spending. Moreover, imports decreased.
Notably, the decline in PCE was due to decreases in services, led by health care as well as food services and accommodations. The decrease in private inventory investment was primarily attributable to a decrease in manufacturing, led by petroleum and coal products. Meanwhile, the decrease in exports primarily due to a decline in services, led by travel. The decline in nonresidential fixed investment was mainly because of a decline in equipment, led by transportation equipment.
“Current dollar GDP decreased 3.4%, or $189.4 billion, in the first quarter to a level of $21.54 trillion. In the fourth quarter, GDP increased 3.5%, or $186.6 billion,” according to BEA.
In the first quarter of 2020, the price index for gross domestic purchases went up 1.7% when compared to a similar rising by 1.4% in the fourth quarter of 2019. In addition, the PCE price index increased 1.3% relative to an increase of 1.4%. With the exception of the food and energy prices, the PCE price index climbed 1.7% versus an increase of 1.3%.
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