Economy Watch: GDP Growth Revised Upward
Despite meager GDP growth, consumers became more optimistic about their financial prospects in May.
By Dees Stribling, Contributing Editor
The Bureau of Economic Analysis released its revised estimate of real U.S. gross domestic product on Friday, the second of three that the bureau will generate. The revision put GDP growth at 0.8 percent in the first quarter of 2016, a sluggish pace but still up from the first estimate of 0.5 percent. In the fourth quarter, real GDP increased 1.4 percent.
The second real GDP estimate is based on more complete source data than were available for the advance (first) estimate issued last month. Overall, gross private domestic investment was reported down at an annualized 3.5 percent in the first report, and 2.6 percent in the second.
One of the categories of economic activity that the BEA tracks is investment in nonresidential structures. In the first estimate, investment in that category was down by an annualized 10.7 percent, but in the second estimate, the drop was 8.9 percent. The decline in investment in nonresidential structures is being driven by a number of factors, only some of which are real estate related. It also includes a decline in investment in structures associated with energy production.
Also on Friday, the University of Michigan reported that its consumer sentiment index for May was at 94.7, down from the preliminary reading of 95.8, but up from 89.0 in April. Despite the meager GDP growth, as well as a higher inflation rate, consumers became more optimistic about their financial prospects and anticipated a somewhat lower inflation rate in the years ahead, according to Surveys of Consumers Chief Economist Richard Curtin.