An Inside Look at the Q1 2023 GDP Second Estimate

Real gross domestic product (GDP) is comprised of four major subcomponents: personal consumption expenditures, gross private domestic investment, net exports, and government consumption expenditures. In the latest Q1 GDP second estimate update, it was reported that real GDP increased at an annual rate of 1.3%. Two out of the four components made positive contributions, one component made negative contributions, while the remaining component had a neutral impact to overall GDP.

Last 4 quarters contributions to GDP Percent Change

Personal consumption expenditures (PCE) and government consumption expenditures (GCE) contributed 2.52 and 0.89 to the Q1 real GDP, respectively. Gross private domestic investment (GPDI) was the sole negative contributor in Q1 at -2.14 while net exports of goods and services (NEGS) were neutral.

Over time, the personal consumption expenditures (PCE) component has shown the most consistent correlation with real GDP. When PCE has been positive, GDP has usually been positive, and vice versa (although this was not the case in Q1 and Q2 2022).