Q1 GDP Advance Estimate: Real GDP at -4.8%

The Advance Estimate for Q1 GDP, to one decimal, came in at -4.8% (-4.78% to two decimal places), a major drop from 2.1% (2.13% to two decimal places) for the Q4 Third Estimate. Investing.com had a consensus of -4.0%%.

Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:

Real gross domestic product (GDP) decreased at an annual rate of 4.8 percent in the first quarter of 2020 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate" on page 2). The "second" estimate for the first quarter, based on more complete data, will be released on May 28, 2020.

Coronavirus (COVID-19) Impact on the Advance First-Quarter 2020 GDP Estimate

The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued "stay-at-home" orders in March. This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note. [Full Release]

Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.18% average (arithmetic mean) and the 10-year moving average, currently at 2.12.

Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 15.1% below trend.

A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. Four of the eleven recessions over this timeframe have begun at a lower level of current real YoY GDP.

In summary, the Q1 GDP Advance Estimate of -4.8 was worse than expected, even as forecasts predicted negative GDP.