Table 4 Contributions to Percent Change in Real Gross Domestic Product (Seasonally Adjusted at Annual Rates) Line Percent Change at an Annual Rate 2022 Q4 2023 Q1 2023 Q2 2023 Q3 2023 Q3 2024 Q1 1 Gross Domestic Product Percentage Points at Annual Rates 2.6 2.2 2.1 4.9 3.4 1.6 2 Personal Consumption Expenditures 0.79 2.54 0.55 2.11 2.20 1.68 3 Goods -0.01 1.14 0.11 1.09 0.67 -0.09 4 Durable Goods -0.08 1.07 -0.03 0.53 0.25 -0.09 5 Nondurable Goods 0.07 0.07 0.14 0.56 0.41 0.00 6 Services 0.80 1.40 0.44 1.02 1.54 1.78 7 Gross Private Domestic Investments 0.62 -1.69 0.90 1.74 0.15 0.56 8 Fixed Investment -0.99 0.53 0.90 0.46 0.61 0.91 9 Nonresidential 0.24 0.76 0.98 0.21 0.50 0.39 10 Structures 0.17 0.77 0.46 0.33 0.32 0.00 11 Equipment -0.26 -0.21 0.38 -0.22 -0.05 0.10 12 Intellectual Property Products 0.32 0.20 0.15 0.10 0.23 0.29 13 Residential -1.23 -0.22 -0.09 0.26 0.11 0.52 14 Change in Private Inventories 1.61 -2.22 0.00 1.27 -0.47 -0.35 15 Net Exports of Goods and Services 0.26 0.58 0.04 0.03 0.25 -0.86 16 Exports -0.41 0.76 -1.09 0.59 0.55 0.10 17 Goods -0.52 0.89 -1.31 0.55 0.45 0.06 18 Services 0.11 -0.13 0.22 0.04 0.10 0.04 19 Imports 0.66 -0.18 1.13 -0.56 -0.30 -0.96 20 Goods 0.55 -0.22 0.78 -0.64 -0.14 -0.74 21 Services 0.11 0.04 0.35 0.08 -0.15 -0.22 22 Government Consumption Expenditures and Gross Investments 0.90 0.82 0.57 0.99 0.79 0.21 23 Federal 0.59 0.33 0.07 0.45 0.15 -0.01 24 National Defense 0.27 0.07 0.08 0.30 0.02 -0.02 25 Nondefense 0.32 0.26 -0.01 0.15 0.14 0.01 26 State and Local 0.31 0.49 0.50 0.53 0.64 0.22 Source: Bureau of Economic Analysis Description: • The above table decomposes percent changes in Real GDP into its components (consumption, investment, government, and net exports) and more specific subcomponents. Analysis: • Real GDP increased by 1.6% from Q4 2023 to Q1 2024 on an annualized basis which is lowest quarterly increase since Q2 2022 (when it fell by 0.6%). • While the 1.6% number might indicate slowing, looking at the components suggests that the economy remains strong. • Personal consumption expenditures remain robust with its 1.68% contribution to the percent change in Real GDP exceeding the overall rate of increase. Growth in spending on services continues to be strong while growth in spending on goods is stagnant with higher interest rates likely impacting durable good spending. • The decline in the rate of growth can be attributed to several factors. Net exports of goods and services fell sharply as higher interest rates have led to a stronger dollar relative to foreign currency. A stronger dollar leads to a decline in net exports (Exports – Imports) as imports become cheaper for US consumers and exports become more expensive to foreign buyers. • The liquidation of inventories (which likely will be replenished in future quarters) and drop in federal spending also tempered the overall rate of growth in Real GDP.
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Center for Business and Economic Insight
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