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.