The Bureau of Economic Analysis released its final estimate of first quarter gross domestic product on Wednesday. In the final estimate for the first quarter the seasonally adjusted annual growth rate for GDP was revised up slightly to -0.2% from -0.7%.
On Wednesday, U.S. financial market indexes were down following the report with the Dow Jones Industrial Average falling -0.96% and the S&P 500 down -0.72%. In the DJIA, Apple Inc. (AAPL, Financial) was the only company posting a gain for the day, up 0.89%. Meanwhile, in the S&P 500 all sectors were lower with the materials sector posting the greatest decrease at -1.27%.
In the final estimate for the first quarter, residential investment was higher at a SAAR of 0.21% versus 0.16% in the second estimate, helping to increase total gross private domestic investment to a SAAR of 0.40% from 0.12%. The residential investment numbers showed further improvement in the housing market and helped to increase the rate of GDP growth for the quarter overall. Consumer spending was also a highlight in the third estimate. Personal consumption expenditures were revised up to a SAAR of 1.43% from 1.23%, led by household consumption expenditures for services at a SAAR of 1.37%.
The low GDP report for the first quarter could push out the timing for a rate increase by the FOMC. While the focus of the Fed’s interest rate decision has mainly been on employment and inflation measures, it also considers economic growth factors as well. The low first-quarter GDP report can be attributed to a drag from winter weather conditions however draining factors such as effects from the strengthened dollar and lower energy price levels overall could be difficult to overlook. With first-quarter GDP growth at a SAAR of -0.2% the FOMC could be forced to await further evidence of stable economic growth likely to follow in second quarter estimates of GDP pushing out the likelihood of a rate increase to the last meeting of the year in December.
