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The slowdown was remarkably widespread. The contribution to real growth from consumer spending, which was 2.22 percentage points in Q4, slowed to 2.04 percentage points in Q1—and that was the good news. The contribution of investment spending flipped from a positive 0.41 percentage points to negative -1.01 points, with fixed investment, inventory investment, and residential investment all in the minus column. The contribution to growth of exports, which have been an element of strength throughout the recovery, dropped from +1.23 percentage points to -1.07 points, only partly offset by a small decrease in imports. Finally, the contribution to growth of state and local government expenditures, which, for the first time in the recovery, had been positive in the final three quarters of 2013, turned negative again. A tiny 0.05 percent boost from federal government spending was not enough to offset the negative growth at lower levels of government.
Today’s data release also includes the first estimate for personal consumption expenditure (PCE) inflation for Q1. The PCE inflation index and the unemployment rate are the Fed’s two main policy targets under its dual mandate to promote price stability and full employment. Currently, the Fed defines price stability as inflation of 2 percent for the PCE index and full employment as a range of 5.25 to 5.75 percent for unemployment rate.>>>Read more
Follow this link to view or download a classroom ready slideshow with complete charts of the latest GDP data