Real gross domestic product (GDP), the total output of goods and services in the U.S., increased at an annual rate of 2.5 percent in the first quarter of 2013, the Commerce Department announced Friday.
This is substantially lower than the expected increase of 3.0 percent. It's also the biggest miss since Q3 2011.
“The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, residential investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending,” the report reads.
“Imports, which are a subtraction in the calculation of GDP, increased,” it adds.
The reason for the miss? Inventory and Fixed Investment came in well below expectations, comprising 1.03 percent and 0.53 percent, respectively, of the overall 2.5 percent increase in GDP, Zero Hedge notes.
Also, disposable personal income fell by 4.4 percent to $136.3 billion in Q1, an unwelcome contrast to the 7.9 percent increase ($228.0 billion) in Q4 2012.
"Real disposable personal income decreased 5.3 percent, in contrast to an increase of 6.2 percent,” the report adds.
But the report wasn’t all bad. Indeed, there was one bright spot:
Real personal consumption expenditures increased 3.2 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 8.1 percent, compared with an increase of 13.6 percent. Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent. Services increased 3.1 percent, compared with an increase of 0.6 percent.
Translation: Personal Consumption Expenditures came in at about 3.2 percent, well above the expected increase of 2.8 percent, and accounted for nearly 2.24 of total Q1 GDP growth.
So at least there's that:
Markets weren’t thrilled with today’s disappointing GDP report and stocks opened mostly lower:
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Front page photo courtesy Getty Images.