| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter [Adjusted] | 0.6% | 0.5% to 0.7% | 0.7% | 0.1% |
| Year over Year [Not Adjusted] | 0.5% | 0.7% |
Highlights
The economy expanded 0.7 percent in the first quarter when not adjusted for sporting events, accelerating from the 0.2 percent growth seen in the fourth quarter. Compared to the same time a year ago, growth was 0.5 percent, a slowdown from 1.0 percent from the fourth quarter.
The result is better than the 0.5 percent initial quarter-on-quarter reading, and a tick higher than the 0.6 percent median of an Econoday survey of economists' forecasts.
Exports were a drag, falling 2.2 percent during the first three months of the year, although imports slowed a bit more at 2.5 percent quarter-on-quarter. While consumer spending was flat, government consumption rose 0.9 percent, compared to 0.4 and 0.2 percent respectively in the fourth quarter.
Manufacturing was a large contributor, with production up 1.5 percent, while finance and insurance increased 0.9 percent. The manufacturing increase was likely due to the conflict in the Middle East as businesses ramped up orders and production in order to try and weather the geopolitical headwinds.
The overall result is a welcome one but does not come without a caveat or two, with the conflict putting pressure on prices which will eat into consumer discretionary spending. As seen, consumers were cautious in the first quarter on their spending.
Market Consensus Before Announcement
The consensus looks for growth at 0.6 percent on the quarter, up from 0.5 percent in the flash.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There is no flash estimate and the first report is typically not issued until around sixty days after the end of the reference quarter. This has the advantage of limiting the size of any future revision and also accommodates the inclusion of the GDP expenditure components.
Description
GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.
The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.