Real GDP for the first quarter of 2016 grew at an annual rate of 0.5 percent, according to the Bureau of Economic Analysis’s first estimate, down from the fourth quarter’s growth rate of 1.4 percent. The first quarter’s slower growth reflected positive contributions from personal consumption expenditures, residential fixed investment and state and local government spending, which was partially offset by negative contributions from nonresidential fixed investment, private inventory investment, exports and federal government spending.
Consumption was the largest contributor to GDP, accounting for 1.3 percent of growth, down from 1.7 percent during the fourth quarter. Consumption spending grew by $52.5 billion during the first quarter of 2016, compared to $68.3 billion during the fourth quarter of 2015.
Non-residential fixed investment was a significant drag on GDP, subtracting 0.8 percent from growth. The fall in non-residential investment was partially offset by a $19.4 billion increase in residential fixed investment, which contributed 0.5 percent to GDP.
Inventories subtracted 0.3% from GDP growth in the first quarter, as both farm and nonfarm private inventories declined. Net exports also subtracted 0.3% from GDP growth, as the decline in exports was greater than the decline in imports.
State and local government spending grew during the quarter, contributing 0.3 percent to GDP. This was offset by a decrease in Federal government spending, which was a 0.11 percent drag.
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