US Corporate Profits Take a Big Hit in Q1 2014 as GDP Falls at a One Percent Annual Rate

The second revision of the US national income accounts for the first quarter of 2014, released today by the Bureau of Economic Analysis, showed that real GDP fell at an annual rate of -1.0 percent. The advance report had shown an annual rate of increase of 0.1 percent. Today's report also showed that corporate profits fell sharply in the quarter.

Most of the change in the numbers between the advance and second estimates for the quarter came from a much faster rundown of inventories than had previously been reported. Inventory depletion contributed -1.62 percentage points to growth, compared with the advance estimate of -.57 percent. Fixed investment was marginally higher than previously reported.

Other sectors showed less change. Consumption was fractionally stronger than previously reported. Government spending decreased a bit more than reported earlier, with all the change due to a bigger decrease at the state and local government level. Exports decreased a bit less than previously estimated, but the decrease in net exports was slightly greater because imports rose, rather than decreasing slightly, as reported in the advance estimate. >>>Read more

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