US Personal Spending Revised Sharply Lower in First-Quarter Data

US Personal Spending is Revised Sharply Lower in First-Quarter Data

Commerce Department data showed that outlays of goods and services increased by 1.8%, compared to a 3.1% pace in the previous estimate. Gross domestic product was revised down slightly to a 1.6% decline in the first quarter.

Spending on services and merchandise was revised lower. Outlays for financial services, insurance and health care were marked down within services. Spending on goods was revised to an annualized 0.3% decline from little changed, reflecting less robust spending on durables. Outlays for non-durable goods fell by a 3.7% rate.

This case is where GDP revisions affect the view of the first quarter, said Alex Pelle, US economist at Mizuho Financial Group Inc. Consumption was moderated instead of accelerating in the first quarter compared to the previous two quarters. The numbers don't usually change until the government releases its third estimate of GDP and the underlying components. The large downward revision to consumer spending paired with a sizable upward revision to inventories is quite unusual.

Private inventory investment was revised sharply higher, rising nearly $189 billion from the previous quarter compared to a previously estimated change of about $150 billion. Retail trade, notably general merchandise stores, and other industries like information, led this.

The report also showed firmer investment in equipment and a smaller decline in nonresidential structures.

Personal spending data for May will be released on Thursday.

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