The US economy didn't contract as much last winter as first thought, according to a report that showed rising corporate profits and suggested the recession hit bottom at the end of 2008. Less inventory liquidation and a smaller drop in exports were factors in the adjustment up from the originally estimated 6.1 percent GDP drop.
Real gross domestic product (GDP) declined at an annualised 5.7 percent rate in the first quarter of 2009, after decreasing 6.3 percent in the fourth quarter of 2008, according to the “preliminary” estimates of the Bureau of Economic Analysis. The first-quarter growth rate was revised up 0.4 percentage point from the “advance” estimate released in April.
Gross Domestic Product (GDP)
GDP is a measure of all goods and services produced in the economy. Its biggest component is consumer spending. As in the earlier estimate, consumer spending turned up, rising 1.5 percent in the first quarter after falling for two quarters. Exports, housing, and business investment, including inventory investment, continued to decline sharply.
Motor vehicle output subtracted 1.36 percentage points from the first-quarter change in real GDP after subtracting 2.01 percentage points from the fourth-quarter change. Final sales of computers added 0.06 percentage point to the first-quarter change in real GDP after subtracting 0.02 percentage point from the fourth-quarter change.
Corporate Profits
Corporate profits rose 3.4 percent at a quarterly rate in the first quarter, after falling 16.5 percent in the fourth quarter. Financial sector profits rose 94.9 percent in the first quarter, while nonfinancial sector profits fell 8.6 percent.
Taxes on corporate income increased $31.6 billion in the first quarter, in contrast to a decrease of $130.3 billion in the fourth. Profits after tax with inventory valuation and capital consumption adjustments increased $11.1 billion in the first quarter, in contrast to a decrease of $120.1 billion in the fourth. Dividends decreased $42.2 billion compared with a decrease of $32.8 billion; current-production undistributed profits increased $53.3 billion, in contrast to a decrease of $87.4 billion.
