Net exports were revised upward by $9 billion, which is even more than was signalled by the last goods and services trade report. The equipment spending component was the biggest surprise to us, with an upward revision of $6 billion instead of the $2-$3 billion adjustment implied by the revised factory figures for the quarter.
The huge inventory contribution to first quarter GDP growth was revised lower as expected, to a $92 billion contribution. The new data, which reveal a 2.6% final sales gain versus the prior 2.0% increase, leave a more solid trajectory for growth as we enter the second quarter.
Our second quarter estimate will remain at 3.0%, with the likelihood that growth will accelerate again in the quarter as inventories again boost GDP in response to plummeting ratios of inventories-to-sales. The slowdown in the second quarter will likely prove temporary. From Standard & Poor's Global Markets