WASHINGTON—A slight downgrade in the Commerce Department's second estimate for first quarter economic growth was due to "lowered estimates for inventory investment and net exports led to the softer reading for overall growth.”
The department's Bureau of Economic Analysis' second first quarter estimate revised the economy's growth to 2.2% from its initial estimate of 2.3%. Although growth decelerated from last year's pace, most components expanded.
One positive in the revision, according to analysis by NAFCU Chief Economist and Vice President of Research Curt Long, is the higher estimate for business investment, "which was up 9.2% during the quarter and appears to be accelerating."
"After-tax corporate profits grew 7.8% during the quarter versus a 0.7% pre-tax gain," Long said. "The economy appears to be accelerating, and the Atlanta Fed's GDPNow forecast estimates growth of 4% for the second quarter, which would be the strongest quarter of growth since 2014."
Personal consumption expenditure (PCE) inflation, the Federal Reserve’s preferred inflation metric, was also revised slightly down from 2.7% to 2.6% in the first quarter's second estimate. Core PCE inflation (excluding food and energy) increased 2.3% during the quarter. Compared to a year ago, PCE and core PCE inflation were 1.8% and 1.6%, respectively.