Key facts
- US first-quarter GDP growth was revised to 2.1% annualized, up from 1.6%.
- Consumer spending growth was cut to 0.5% from 1.4% in the first quarter.
- Business investment in equipment grew 15.8%, and intellectual property outlays rose 13.8%.
- Corporate profits from current production increased by $74.4 billion.
- The average of GDP and GDI, or gross domestic output, was revised up to 1.7%.
The U.S. economy demonstrated stronger growth than initially reported in the first quarter, with Gross Domestic Product (GDP) revised upward to a 2.1% annualized rate, according to the Commerce Department's Bureau of Economic Analysis. This upward revision surpassed economists' expectations, which had largely anticipated the growth rate to remain at 1.6% as previously reported.
The upgrade in GDP was primarily driven by a downward revision to imports, particularly consumer and capital goods. However, this positive impact was partially offset by a significant downgrade to consumer spending, a key component of the economy representing over two-thirds of its total output. Consumer spending growth was slashed to a mere 0.5% pace from the previously reported 1.4%, reflecting reduced outlays on services, including financial services, insurance, and international travel. A stock market selloff in the quarter contributed to some of these downward revisions in financial services.
Despite the slowdown in consumer spending, there are indications of a pickup in early second-quarter spending, potentially bolstered by tax refunds. Business investment in equipment saw a slight downward revision but still increased at a robust 15.8% rate, while outlays on intellectual property products were revised upward to a 13.8% pace. Corporate profits from current production also showed a substantial upward revision, rising at a $74.4 billion rate for the quarter. When measured from the income side, Gross Domestic Income (GDI) grew at a 1.2% rate, and the average of GDP and GDI, known as gross domestic output, was revised up to a 1.7% growth rate.