First Quarter Economic Growth Revised Up to 0.9 Percent

The Commerce Department said Thursday that economic growth in the first quarter of 2008 was a bit better than initially reported, moving Gross Domestic Product (GDP) growth in the quarter to 0.9 percent from the 0.6 percent growth it previously reported in late April (“U.S. Economy Holds Steady in First Quarter at 0.6 Percent Growth, But…,” April 30).

Economists surveyed by MarketWatch and Reuters expected Q1 growth to be revised to 0.9 percent in Commerce’s first revision of the number. A final reading of first quarter GDP growth will be announced in late June.

Commerce held its reading of fourth quarter 2007 economic growth steady at 0.6 percent, as initially reported.

The revised numbers for the first quarter show a slightly better mix for the economy. But government spending was higher than initially reported, increasing 5.6 percent for military spending alone. Government spending accounted for 0.4 percentage points of the 0.9 percent growth in the quarter, with military spending accounting for 0.3 points alone.

Real consumer spending increased at a 1 percent annual rate in the first quarter, the same amount as initially reported in April. Consumer spending contributed 0.7 of a percentage point to growth.

The main drags on the economy in the first three months of 2008 were housing, business investments and exports. Residential investments fell at an annual rate of 25.5 percent, the fastest drop since late 1981, with investments in homes now having declined for nine straight quarters. Housing subtracted 1.2 percentage points from growth.