U.S. GDP Keeps Getting Smaller
The real U.S. GDP (gross domestic product), which represents the output of goods and services produced by labor and property located in the U.S., decreased at an annual rate of 6.1% in Q1 2009. This follows a 6.3% decrease in Q4 2008 and 0.5% decrease in Q3 2008.
According to the Bureau of Economic Analysis, declining exports and equipment and software sales contributed to the GDP’s first quarter contraction. However, growth in personal consumption expenditures and a decrease in imports partially offset these and other negative factors and led to the GDP shrinking at a slightly lower rate in Q1 2009 than in Q4 2008.
In addition, motor vehicle output subtracted 1.36% from quarterly GDP change, while computer sales added .05% to quarterly GDP change. The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1% in Q1, compared with a 3.9% decrease in Q4. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4% in Q1, compared with an increase of 1.2% in Q4
Other notable Q1 2009 GDP figures, including “real” estimates chained to 2000 dollars, follow:
- Real personal consumption expenditures increased 2.2%, compared to a 4.3% decrease in Q4.
- Real exports of goods and services decreased 30%, compared to a 23.6% drop in Q4.
- Real imports of goods and services decreased 34.1%, compared to a 17.5% fall in Q4.
- Equipment and software output decreased 33.8%, compared to a 28.1% decline in Q4.
- Real gross domestic purchases decreased 7.8%, compared to a 5.9% decrease in Q4.
For the entire year 2008, GDP increased 1.1% from 2007. In 2007, GDP increased 2% from 2006.
The GDP declining sharply for the second quarter in a row demonstrates the U.S. is in a serious recession. However, there have been a number of recent positive economic and consumer behavior indicators, as well as some negative ones. Following is a brief summary of other recent economic developments of which retailers should take note:
Positive Signals
- The Consumer Confidence Index rose sharply in April 2009.
- Online shopping activity is showing signs of improvement.
- The U.S. trade deficit shrank in January 2009, although declining consumer demand drove the reduction.
- Personal spending of U.S. consumers increased in February 2009.
- The Restaurant Performance Index rose slightly in February 2009.
Negative Signals
- Total spending for the Mother’s Day holiday is expected to decline.
- Mexico applied retaliatory tariffs to 89 U.S. products in March 2009.
- U.S. retail and food services sales fell in February 2009.
- U.S. unemployment hit 8.5% in March 2009.