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GDP Slips – Set For Swing Up As Personal Income Jumps And Inventories Need Replenishing

United States Of America – GDP (real gross domestic product) fell at an annual rate of 1.4 percent in the first quarter of 2022 following a climbed by 6.9 percent in the fourth quarter GDP.

gdp1q22 adv chart 01 1

The GDP estimate issued today is based on incomplete or subject to further adjustment by the source agency source data and on May 26, 2022, the “second” estimate for the first quarter, based on more complete data sets, will be accounted.

Things To Consider On GDP Data

Leading up to the end of the year and following the holidays inventories built up and to ease somewhat. The fourth-quarter acceleration was led by an increase in inventory investment, increases in exports and residential fixed investment, and an increase in consumer expenditure.

The decline in private inventory investment was driven mostly by declines in wholesale trade, primarily motor vehicles and retail trade… notably, “other” retailers and motor vehicle dealers.

In terms of exports, widespread declines in non-durable items were partially offset by an increase in “other” business services which include mainly financial services.

The reduction in federal government spending was mostly due to a reduction in defense spending on intermediate goods and services.

Early first QTR rate hike direction, geo-political fears and war spend rerouting has skewed normal season economic indicators. Sideline watching in construction and real estate investment starts and spend have also delayed inventory replenishing.

Boomerang In GDP?

With record earnings and corporate cash piles accumulating – GDP, could see a boomerang as these companies will have are hard time sitting on cash and avoiding inventory and capital expenditures in the economic market of competitiveness.

Other things to consider is that unknown humanitarian aid and repurposing positions for world support will be most likely realized in the next data set releases and adjustments.

Additional inventory and product assembly replenishment’s from Governor Abbott’s Texas / Mexico border supply chain will also be compounded through alternative sourcing and replacements. Further more trucking and LTL related issues of protest have further dissipated both via transborder and domestic.

Personal Income

Personal income in current dollars grew $268.0 billion in the first quarter, compared to $123.9 billion in the fourth quarter. The increase was mostly due to an increase in pay, which was somewhat offset by a reduction in government social benefits .
Government aid payments in the form of social benefits to households fell in the first quarter as components of numerous federal programs expired or were phased out.

In the first quarter, disposable personal income climbed by $216.6 billion, or 4.8 percent, compared to a 0.4 percent growth in the fourth quarter. Real disposable personal income fell by 2.0 percent, compared to a 5.6 percent drop in the previous year.

Undertones of this preliminary data and the job reports may result in a silver lining as it unfolds.

To learn more about the GDP please view this info-diagram for more information:

You can also find a copy of the U.S. Bureau of Economic Analysis 2022 QTR 1 Report here.

Source BEA




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