US first quarter GDP was revised up 0.3 percentage points this morning to a seasonally adjusted annualized rate of 0.8 percent. The Bloomberg Econoday consensus was a bit more at 0.9% in a range of 0.5% to 1.1%.

Highlights

First-quarter GDP is now revised higher but only slightly, to an annualized growth rate of plus 0.8 percent for a 3 tenths gain from the initial estimate. Upward revisions to residential investment and exports are behind the small gain along with an unwanted upward revision to inventories. Nonresidential investment remains very weak with government purchases holding only modestly positive. Personal consumption was soft, unrevised at a plus 1.9 percent rate. Final demand is revised higher but not by very much, only 1 tenth to a very soft plus 1.2 percent. Inflation data are weak with the GDP price index revised 1 tenth lower to an annualized plus 0.6 percent. Residential investment, boosted by home improvements, is the standout in this report which otherwise shows a very soft opening to 2016.

Recent History

The second estimate for first-quarter GDP is expected to come in at plus 0.9 percent for a 4 tenths gain from the initial reading. Personal consumption expenditures are expected to be revised higher in what would underscore early second-quarter strength for retail sales. Residential fixed investment, in another indication of consumer strength, is also expected to be revised higher. The GDP price index is seen holding at only 0.7 percent.

Real GDP Growth

GDP 2016-05-27

GDP Price Index Deflator

GDP 2016-05-27B

Second quarter year-over-year will be a tougher beat, especially if the GDP deflator (inflation) ticks up.

Mike “Mish” Shedlock