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GDP Exceeds Expectations With 2.0% Rise in First Quarter

The Commerce Department said the U.S. economy, as measured by the gross domestic product, expanded at a 2.0 percent annual rate during the first three month of 2001 after expanding a sluggish 1.0 percent during the fourth quarter of 2000. Most economists were expecting the first quarter GDP to expand by 1.1 percent.

The U.S. Commerce Department's first look at the 1st quarter economy shows an economy that nearly double analysts expectations with an annualized growth rate of 2.0%. While growth was modest, it does not provide the impetus for further rate cuts by the Federal Reserve. In the fourth quarter of 2000, real GDP increased 1.0% The implicit price deflator for the 1st quarter was 3.2%. The GDP figures reflect the total output of goods and services produced in the U.S.

The main forces behind the increase were personal consumption expenditures (PCE), government spending and nonresidential structures. Weaker inventory accumulation continued from the 4th quarter of 2000. The contribution of these components were partially offset by a large decrease in private nonfarm inventory investment and decreases in exports, equipment and software. Imports, which are a subtraction in the calculation of the GDP, decreased.

Business spending was moderately higher, exceeding expectations of a decrease. IT spending did decline, with communications and other equipment down 3.7%. The fall in computer equipment was 0.8%, below expectations. Offsetting spending increases were registered in transportation equipment and oilfield activity.

The price index for gross domestic purchases increased 2.8% in the 1st quarter, compared with an increase of 1.9% in the 4th quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.4 in the 1st quarter, compared with an increase of 1.6% in the 4th quarter.

Latest GDP Figures at a Glance

1Q 2000 2Q 2000 3Q 2000 4Q 2000 1Q 2001
Overall GDP 8.3% 4.8% 5.6% 2.2% 1.0%
Durable Goods 23.6% -5.0% 7.6% -3.1% 11.9%
Non-residential investment 21.0% 14.6% 7.7% -0.1% 1.1%
Exports 6.3% 14.3% 13.9% -6.4% -2.2%
Imports 12.0% 18.6% 17.0% -1.2% -10.4%
Gov't Consumption -1.1% 4.8% -1.4% 2.9% 4.0%

The Gross Domestic Product, First Quarter 2001 (Preliminary) report will be released on May 25, 2001.