US GDP grew by 2.4% in Q1 2013 according to the second estimate from the BEA, but government expenditures decreased and export growth slowed

1. Economics for your Classroom from
Ed Dolan’s Econ Blog
US GDP Grows 2.4 Percent in
Q1 but Government and
Exports Weaken
Posted May 30, 2013
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2. May 30, 2013 Ed Dolan’s Econ Blog
US GDP Grows at 2.4 Percent Rate in Q1 2013
 The second estimate from the
Bureau of Economic Analysis
showed US GDP growing at a 2.4
percent annual rate in the first
quarter of 2013, after a weak 0.4
percent showing in Q4 2012
 That was almost the same as the 2.5
percent reported in last month’s
advance estimate for the quarter

3. Expansion Resumes
 According to standard business cycle
terminology, the recession phase of the
business cycle is the downward
movement of GDP from its previous
peak
 The recovery phase is the upward
movement from the trough (low point)
of the recession and continues until
GDP again reaches its previous peak.
 Once GDP moves above its previous
peak, the expansion phase begins.
 The expansion resumed in Q1 2013
after almost stalling in Q4 2012
May 30, 2013 Ed Dolan’s Econ Blog

4. Sources of Growth by Sector
 Consumption contributed 2.4 percentage
points to Q4 growth, including both goods
and services
 Investment contributed 1.16 percentage
points. Fixed investment was lower than in
Q4 while inventories grew faster
 Exports contributed marginally to growth
but net exports were negative because
imports grew faster than exports (details on
Slide 5)
 The government sector also made a
negative contribution to growth (details on
Slide 6)
Contribution by sector to the
2.4% GDP growth in Q1 2013
Note: Imports are recorded in the national
accounts with a negative sign, so the
negative 0.32 percent shown here represents
an increase in imports
May 30, 2013 Ed Dolan’s Econ Blog

5. Export Growth Slows
 Exports have been a source of
strength throughout the recovery, but
they are weakening as the global
economy slows
 US exports fell in Q4 for the first time
since 2009, and they barely grew in
Q1 2013
May 30, 2013 Ed Dolan’s Econ Blog

6. Fiscal Drag Continues
 The government contribution to GDP
growth, as measured by government
consumption expenditure and gross
investment, has been negative
throughout most of the recovery
 Government spending growth turned
positive in Q3 2012, but negative
growth returned in Q4 and continued
in Q1 2013
 Economists refer to the negative
impact on GDP of falling government
spending as fiscal drag. Political
gridlock over spending and taxes is
expected to increase fiscal drag later
this year
May 30, 2013 Ed Dolan’s Econ Blog

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