USA Outlook Update (May 26, 2006): Revised real GDP of 1st Quarter of 2006 and its adjustments

GDP of the 1st quarter of 2006 has been revised, and the headline number for real GDP growth rate is revised up to +5.3% from the original +4.8% mainly due to the misestimate of trade deficit in the first report. As discussed in Update of May 19, 2006, this revision will require a recalculation of the process to smooth out the violent gyration in the durable goods consumption data in the GDP report of the 4-th quarter of 2005 to the 1st quarter of 2006. The new calculation results in +2.9% for the 4-th quarter of 2005 and +4.0% for the 1st quarter of 2006 in the growth rate of adjusted real GDP.

The GDP of 1st quarter of 2006 will be revised further at the end of June and again in the first report of GDP for the 2nd quarter of 2006 at the end of July, but those revisions are usually quite minor. The second quarter of 2006 report will be highly anticipated to confirm or to deny the picture that US economy is undergoing a slower growth period in 2006.