VCG Monthly Review May 2015

US first quarter real GDP was weaker than initially thought, contracting by 0.7% annualized rate (a.r.), according to the second estimate released by the Bureau of Economic Analysis (BEA). In the advance estimate, real GDP increased 0.2%. The downward revision was primarily driven by higher trade deficit and lower private inventory investment than previously estimated. The average first quarter growth rate since the end of recession has been 0.4%, while the average growth rate over that period was 2.2%. The BEA is currently working to improve its GDP seasonality estimates and the San Francisco Fed has recently published a method they believe will better adjust for residual seasonality. The Federal Reserve attributed the weak GDP figures to transitory factors. The American economy has been unable to generate much growth momentum since the recession ended. This is the third quarterly GDP contraction during this recovery.