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Brent Meyer |


Brent Meyer

Brent Meyer is a former economist of the Federal Reserve Bank of Cleveland.


Economic Trends

Real GDP: First-Quarter 2009 Final Estimate

Brent Meyer

The final estimate for real GDP growth in the first quarter of 2009 came in at −5.5 percent, 0.2 percentage point above the preliminary estimate and 0.6 percentage point higher than the advance estimate (a relatively large advance-to-final revision by historical standards, but nowhere near the advance-to-final revision in the previous quarter of −2.5 percentage point).

Real GDP and Components, 2009:Q1 Final Estimate

Quarterly change,
billions of 2000$
Annualized percent change, last:
Four quarters
Real GDP
Personal consumption
Business fixed investment
Residential investment
Government spending
  National defense
Net exports
Private inventories

Source: Bureau of Economic Analysis.

A downward revision to real imports (which adds to real GDP growth) was the largest change from the previous estimate, adding 0.5 percentage point to real GDP growth. That gain was partially offset by a downward revision to real exports and a reduction of the contribution of real consumption, which together subtracted an additional 0.4 percentage point from growth. The first-quarter sell-off in private inventories was reduced from −$91.4 billion to −$87.1 billion (down from −$103.7 billion in the advance release), tacking on an additional 0.1 percentage point. The investment picture remained virtually unchanged in the revision.

As the U.S. economy has taken a turn south, global trade has diminished dramatically, in part as due to fallout of the financial crisis rippling across the globe. Exports decreased by a whopping 30.6 percent in the first quarter, their steepest quarterly decrease since 1969. Imports declined even further (down 36.4 percent), their most precipitous quarterly fall since 1947.

The quarterly declines in imports and exports resulted in rather dramatic contributions to real GDP growth in the first quarter, with imports (which enter in as a subtraction in real GDP growth accounting) adding 6.6 percentage points and exports subtracting 4.2 percentage points. Before the start of the recession, the average effect of imports on growth since 1980 was a subtraction of three-quarters of a percentage point, while exports averaged a 0.6 percentage point boost to output growth. These typical effects led to a slightly negative contribution from net exports over the past 27 years or so.

Roughly 40 percent of the panelists on the Blue Chip survey revised up their estimate of real GDP growth for 2009, resulting in an upward revision to the consensus estimate for 2009 (from -2.8 to -2.7 percent), according to the June survey. On the other hand, the consensus estimate for 2010 growth ticked up 0.1 percentage point to 2.0 percent, its second consecutive upward revision. In a special question, the panelists were asked when the NBER will date the trough of the cycle (the end of the recession). Almost every respondent expects that the recession will have abated by the end of 2009. However, a couple of the respondents anticipate a much longer recession, projecting that it will not end until the second quarter of 2010.