THE COMPONENTS OF GDP

The U.S. economy grew by 3.1 percent in the first quarter of 2019, according to the third and final estimate of GDP growth released by the U.S. Bureau of Economic Analysis (BEA) on Thursday. While the end result is in line with the previous estimate, the separate components of the gross domestic product developed differently than previously anticipated.

Personal consumption, by far the largest component of the GDP, was significantly weaker than expected, increasing just 0.9 percent compared to the preceding quarter, instead of the 1.3 percent increase predicted in the second reading from May 30th. While consumer demand for durable and non-durable goods was actually better than previously expected, growth in services spending was cut in half compared to the previous reading (1.0 percent vs. 2.1 percent)

The lackluster growth of personal consumption was offset by stronger than expected increases in government spending (2.8 vs. 2.5 percent) and private domestic investment (6.0 vs. 4.3 percent), with the latter being driven by nonresidential business investments in particular (4.4 vs. 2.3 percent). The following chart breaks down the Q1 2019 GDP into its four components and shows how much each component contributed to the total growth of 3.1 percent.