by Bill McBride on 6/29/2006 03:23:00 PM
Thursday, June 29, 2006
Final Q1 GDP was released today and the headlines blared: First-quarter GDP growth strong
The U.S. economy grew at a revised 5.6 percent annual rate in the first quarter as the fastest pace of growth in 2-1/2 years ... The department pushed its estimate of first-quarter growth in gross domestic product up from 5.3 percent it reported a month ago.But personal savings were revised down significantly. In the prelimary Q1 GDP report, personal savings were a negative $50.5 billion and the personal saving rate was reported as a negative 0.5 percent in Q1, 2006.
In the final Q1 GDP report, personal saving were a negative $128.1 Billion, and the savings rate was a negative -1.4%; almost as bad as the Q3 2005 savings rate that was partially attributed to hurricane Katrina's impact.
Click on graph for larger image.
Hurricane Katrina impacted personal savings in Q3 2005. In Q4 2004, the Microsoft special dividend distorted the personal savings numbers. In Q3 2001, personal savings spiked due to consumers behavior following 9/11.
Even though GDP was strong in Q1, the negative personal savings rate is a concern.
Posted by Bill McBride on 6/29/2006 03:23:00 PM