What We Can Learn from the GDP Numbers

The advance estimates for the nation’s 2020 first quarter GDP came out today. A few notable highlights included:

• Real GDP decreased by 4.8% from the previous quarter.
• People are saving more — the personal saving rate came in at 9.6% (compared to the fourth quarter of 2019, which was at 7.6%).
• Personal consumption of durable goods decreased by 16.1%.
• Personal Consumption of services decreased by 10.2%.

This last bullet point is important to pay attention to as the personal consumption of services generally makes up about 45% of our country’s Gross Domestic Product.

For those diving into the data (which can be accessed here), you might see another table which shows the data compared to the previous year’s quarter (year-over-year change). For the personal consumption of services statistic, the decrease is only .9%. To reconcile this disparity, one must realize that the statistic isn’t expected to be seasonal but, rather, a quarter-to-quarter acceleration is expected.

Although a meaningful decrease in the durable goods category is observed, it is worth noting that most of this income is likely to be deferred rather than cancelled.

*These data are advance estimates and are subject to revision.

Source

These data were retrieved from https://www.bea.gov/system/files/2020-04/gdp1q20_adv_0.pdf on 04/29/2020 and were published on the same day.