Then and now

25 June 2014 By Martin Hutchinson

First-quarter GDP contracted at a surprisingly high 2.9 pct annualized rate in the final accounting, the biggest drop since early 2009. Back then, output, jobs, investment, trade and the markets were heading in a different direction. Rhyming economic declines aren’t all the same.

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The U.S. economy contracted at a seasonally adjusted annualized rate of 2.9 percent in the first quarter, its sharpest decline in five years, according to a final estimate released on June 25 by the Commerce Department’s Bureau of Economic Analysis. The first estimate showed GDP growth at a 0.1 percent annualized rate and the second at a 1 percent annualized decline.

Slower inventory accumulation subtracted 1.7 percentage points from GDP growth and net exports 1.5 percentage points. Personal consumption expenditures, meanwhile, contributed 1 percentage point. Healthcare, which had added 1 percentage point in the previous estimate, swung to subtracting 0.2 percentage point in the latest.

In first-quarter 2009, GDP fell at a 5.4 percent annualized rate, to which fixed investment’s fall contributed 4.8 percentage points, inventory declines contributed 2.3 percentage points and personal consumption’s decline contributed 0.8 percentage point. On the other hand government consumption’s rise added 0.2 percentage point to growth and net exports added 2.3 percentage points.

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