GDP Breakdown

GDP Breakdown

Highlights
-Real GDP increased by 1.4% in Q1 2024, up from the second estimate of 1.3%.
-This growth rate is a significant deceleration from the 3.4% increase in Q4 2023.
-Current-dollar GDP rose 4.5% to $28.27 trillion.
The price index for gross domestic purchases increased 3.1%.
-Personal consumption expenditures (PCE) price index increased 3.4%.
-Personal income and disposable personal income saw increases, though both were revised downward.
-Real gross domestic income (GDI) increased 1.3%.
Corporate profits decreased by $47.1 billion.

Good Parts
-Upward Revision of GDP: The increase in GDP from 1.3% to 1.4% is a positive adjustment.
-Current-dollar GDP Growth: An increase of 4.5% indicates a growing economy in nominal terms.
-Nonresidential Fixed Investment: Increased investments in business infrastructure and equipment.
-Government Spending: Increases in both state and local government spending contributed positively.
Residential Fixed Investment: Acceleration in housing investments is a good sign for the housing market.

Bad Parts
-Consumer Spending: Downward revision in consumer spending, which is a major component of GDP.
Private Inventory Investment: Decrease in private inventory investment indicates businesses are not restocking as much.
-Corporate Profits: Decrease of $47.1 billion in corporate profits could signal economic challenges for businesses.
-Exports and Federal Government Spending: Both decelerated, contributing to the overall slower growth rate.
-Real Disposable Personal Income: Downward revision to 1.3% growth suggests households have less spending power than initially thought.

Revisions from Previous Report
-GDP: Revised up from 1.3% to 1.4%.
Current-dollar GDP: Revised up from 4.3% to 4.5%.
-Price Index for Gross Domestic Purchases: Revised up from 3.0% to 3.1%.
-PCE Price Index: Revised up from 3.3% to 3.4%.
-Excluding Food and Energy: PCE price index revised up from 3.6% to 3.7%.
-Personal Income: Revised down by $7.7 billion.
-Disposable Personal Income: Revised down by $26.6 billion.
-Personal Saving: Revised down by $19.3 billion.
-Real GDI: Revised down by 0.2 percentage points.
Corporate Profits: Revised down by $26.0 billion.

Economic Implications
-Slower Growth: The deceleration in GDP growth from Q4 2023 indicates the economy is cooling off, which could be a sign of stabilization or a potential slowdown.
Inflation Pressure: Increases in the price index and PCE suggest continued inflationary pressures, although not sharply higher.
-Consumer Spending: Weakness in consumer spending could impact retail and related sectors, suggesting caution in consumer confidence.
-Corporate Profit Decline: This might result in reduced business investments and potential layoffs, affecting overall economic health.

Stocks That May Be Impacted
-Retail and Consumer Goods: Companies like Walmart (WMT) and Amazon (AMZN) might see varied impacts due to lower consumer spending.
-Construction and Real Estate: Positive impacts on companies like Lennar (LEN) and D.R. Horton (DHI) due to increased residential investment.
-Financials: Banks and financial institutions like JPMorgan Chase (JPM) might experience mixed impacts from changes in personal income and savings rates.
-Manufacturing: Companies in the durable goods sector like Caterpillar (CAT) may be negatively impacted due to declines in durable goods manufacturing.
-Tech and Nonfinancial Corporations: With a drop in nonfinancial corporate profits, tech giants like Apple (AAPL) and Microsoft (MSFT) might face pressures.

Summary
The U.S. economy grew by 1.4% in the first quarter of 2024, a slight improvement from the previous estimate but a marked slowdown from the 3.4% growth in Q4 2023. The upward revision was primarily driven by adjustments to imports, nonresidential fixed investment, and government spending, while consumer spending was revised downward. Inflation indicators showed slight upward revisions, maintaining pressure on prices. Personal income and savings rates also saw downward revisions, indicating potential challenges for consumer spending power. Corporate profits declined significantly, suggesting economic difficulties for businesses. Overall, the data reflects a mixed economic picture with both positive signs of investment and government spending, but also challenges in consumer spending and corporate profitability.