Survey of Current Business

Chronicling 100 Years of the U.S. Economy

May 2020
Volume 100, Number 5

GDP and the Economy

Advance Estimates for the First Quarter of 2020

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Real gross domestic product (GDP) decreased at an annual rate of 4.8 percent in the first quarter of 2020, according to the “advance” estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 In the fourth quarter of 2019, real GDP increased 2.1 percent.

The decrease in real GDP in the first quarter reflected negative contributions from consumer spending, nonresidential fixed investment, exports, and inventory investment that were partly offset by positive contributions from residential fixed investment and government spending.2 Imports, which are a subtraction in the calculation of GDP, decreased (chart 2 and table 1).

In the first quarter, downturns in consumer spending and exports, a larger decrease in nonresidential investment, and a smaller increase in government spending were partly offset by a larger increase in residential investment and a smaller decrease in inventory investment. Imports decreased more in the first quarter than in the fourth quarter.

  • The downturn in consumer spending reflected downturns in spending on both goods and services.
    • The largest contributors to the downturn in services were in health care and in food services and accommodations, as “stay-at-home” orders to protect against COVID-19 affected both the availability of and demand for services in these categories (see “Coronavirus (COVID-19) Impact on the Advance First-Quarter 2020 GDP Estimate”).
    • Within goods, the main contributors were downturns in motor vehicles and parts and in clothing and footwear.
  • The downturn in exports reflected a downturn in exports of services, led by travel.
  • The larger decrease in nonresidential investment was led by a larger decrease in equipment, reflecting a larger decrease in transportation equipment and a downturn in information processing equipment.
  • The smaller increase in government spending primarily reflected downturns in state and local consumption expenditures and in federal defense gross investment. The downturn in state and local consumption expenditures was more than accounted for by a downturn in employee compensation, including compensation for education services. For details, see “How does BEA measure public education services during the closings of schools and college campuses in response to the COVID-19 pandemic?
  • The larger increase in residential fixed investment was led by an acceleration in residential structures, which includes new construction and improvements.
  • The smaller decrease in inventory investment was led by a smaller decrease in nonfarm inventory investment. The main contributor was an upturn in retail trade inventory investment, mainly by motor vehicle and parts dealers.
  • The larger decrease in imports reflected a downturn in services, led by a downturn in travel and a larger decrease in transport services.

Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 1.6 percent in the first quarter after increasing 1.4 percent in the fourth quarter (table 2 and chart 3). The larger increase reflected accelerations in the prices paid for state and local government spending and in nonresidential fixed investment.

Food prices increased 3.1 percent after increasing 0.4 percent. Prices for energy goods and services turned down, decreasing 11.0 percent in the first quarter after increasing 4.7 percent in the fourth quarter. Gross domestic purchases prices excluding food and energy increased 1.9 percent in the first quarter after increasing 1.3 percent in the fourth quarter.

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

Consumer prices excluding food and energy, a measure of the “core” rate of inflation, accelerated, increasing 1.8 percent in the first quarter after increasing 1.3 percent in the fourth quarter.

Personal income (table 3), which is measured in current dollars, increased $95.2 billion in the first quarter after increasing $144.1 billion in the fourth quarter. The smaller increase primarily reflected a downturn in private wages and salaries, most notably in services-producing industries, which was partly offset by an acceleration in personal current transfer receipts.

Personal current taxes increased $18.5 billion in the first quarter after increasing $20.4 billion in the fourth quarter.

Disposable personal income (DPI) increased $76.7 billion in the first quarter after increasing $123.7 billion in the fourth quarter. Personal outlays decreased $253.5 billion in the first quarter after increasing $118.8 billion in the fourth quarter, primarily reflecting the downturn in consumer spending.

The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 9.6 percent in the first quarter; in the fourth quarter, the personal saving rate was 7.6 percent.

Real DPI (chart 5) increased 0.5 percent in the first quarter after increasing 1.6 percent in the fourth quarter. Current-dollar DPI increased 1.9 percent after increasing 3.0 percent.

 


  1. “Real” estimates are in chained (2012) dollars, and price indexes are chain-type measures. Each GDP estimate for a quarter (advance, second, and third) incorporates increasingly comprehensive and improved source data; for more information, see “The Revisions to GDP, GDI, and Their Major Components” in the January 2018 Survey of Current Business. Quarterly estimates are expressed at seasonally adjusted annual rates, which reflect a rate of activity for a quarter as if it were maintained for a year.
  2. In this article, “consumer spending” refers to “personal consumption expenditures,” “inventory investment” refers to “change in private inventories,” and “government spending” refers to “government consumption expenditures and gross investment.”