MA’s Monthly GDP Measure Declined 0.8% in January

Monthly GDP declined 0.8% in January, setting up the first quarter for a soft reading.  The sharp decline in January reflected declines in final sales and inventory investment.  Within final sales, real PCE was weak, in large part reflecting a weather-related decline in consumption of electric and gas utilities.  Also pulling down final sales was a sharp decline in state-and-local construction and a large increase in imports.  Nonfarm inventory investment fell in February, the second consecutive decline following an elevated level in November.  The level of GDP in January was 1.6% below the fourth-quarter average at an annual rate.  Implicit in our latest forecast of 1.3% GDP growth in the first quarter is a sharp, 1.0% increase in monthly GDP in February and a solid, 0.3% increase in March.


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