Drop in consumer expenditures and private investment lowered GDP growth

The 1st quarter GDP growth was revised downward from 2.5% to 1.8%. A big chunk of that was due to a downward revision in consumer expenditures from a robust growth of 3.2% to 2.6%. Consumers also appeared to have spent less on “services” than previously estimated, the growth in this category dropped from 3.1% to a relatively poultry 1.7%. The revised consumer expenditures growth of 2.6% is not bad, but it is clearly not robust.

Of more importance to future economic growth, was the significant downward revision of the growth of private domestic investment from 12.3% to 7.4%, while still a good number, it is far from the robust double digits of the original estimate.

There are other minor adjustments to the original estimate, but these two are of most impact and have caused downgrade revisions to most forecasts of 3% plus growth for 2013.