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Gross Domestic Product
First Quarter of 2020 (Advance Estimate)
April 29, 2020
This technical note provides background information about the source data and estimating methods
used to produce the estimates presented in the GDP news release. The complete set of estimates for
the first quarter is available on BEA's Web site at www.bea.gov; a brief summary of "highlights" is also
posted on the Web site. In a few weeks, the Survey of Current Business, BEA’s online monthly journal,
will publish a more detailed analysis of the estimates ("GDP and the Economy").
Coronavirus (COVID-19) Impact on First-Quarter 2020 GDP
Real GDP decreased 4.8 percent (annual rate) in the first quarter of 2020, following a 2.1 percent
increase in the fourth quarter of 2019. The decline in first quarter GDP was, in part, due to the response
to the spread of COVID-19, as governments issued “stay-at-home” orders in March. This led to rapid
changes in demand, as businesses and schools switched to remote work or canceled operations, and
consumers canceled, restricted, or redirected their spending. The full economic effects of the COVID-19
pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts
are generally embedded in source data and cannot be separately identified.
Key Source Data and Assumptions for the Advance Estimate
The advance estimate of GDP for the first quarter is based on source data that are incomplete and
subject to updates. Three months of source data were available for consumer spending on goods;
shipments of capital equipment; motor vehicle sales and inventories; durable goods manufacturing
inventories; wholesale and retail trade inventories; exports and imports of goods; federal government
outlays; and consumer, producer, and international prices. BEA used information on data collection
disruptions and reliability assessments from its major source data providers, notably the Census Bureau
and the Bureau of Labor Statistics, to identify where routine GDP estimation methods and sources did
not sufficiently capture the changes in economic activity that occurred at the end of the quarter. More
information on the source data and BEA assumptions that underlie the first-quarter estimate is shown in
the "Key Source Data and Assumptions" table on the BEA Web site.
For major source data series for which only two months of data were available, or for where data for the
first quarter are not yet available, BEA's assumptions were based on a variety of sources, most notably:
private high-frequency credit card transactions data to capture rapid shifts in consumer spending,
unemployment claims data to identify late-period declines in business production and compensation,
and information on the timing of state-mandated school closures that impacted government spending.
Real GDP and Related Aggregates
Real GDP decreased 4.8 percent (annual rate) in the first quarter of 2020, following a 2.1 percent
increase in the fourth quarter of 2019. The decrease in first quarter real GDP reflected decreases in
consumer spending, nonresidential fixed investment, exports, and private inventory investment that
were partly offset by increases in residential fixed investment and government spending. Imports, which
are a subtraction in the calculation of GDP, decreased.
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The decrease in consumer spending reflected declines in both goods and services. Within goods,
a decrease in durable goods was partly offset by an increase in nondurable goods. Within
services, household consumption of health care, foods services and accommodations, recreation
services, and transportation services were the leading contributors to the decrease.
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The decrease in nonresidential fixed investment reflected decreases in equipment and
structures that were partly offset by an increase in intellectual property products.
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For durable goods, the largest contributor to the decrease was new motor vehicles,
based primarily on three months of unit sales data from Ward’s Automotive Reports.
For nondurable goods, increases in food and “other” nondurable goods, notably
prescription drugs, were partly offset by a decrease in clothing and footwear. Estimates
of food as well as clothing and footwear primarily reflected Census Bureau Monthly
Retail Trade Survey (MRTS) data, and the estimates of prescription drugs primarily
reflected Intercontinental Marketing Services Health data on prescription drug sales.
For health care, hospital and outpatient services decreased, based primarily on
employment, hours, and earnings data from the Bureau of Labor Statistics (BLS) Current
Employment Statistics report as well as credit card transactions data.
The decrease in food services and accommodations was accounted for by declines in
purchased meals and beverages, based on Census MRTS data, and in hotels and motels,
based on Smith Travel Research data.
For recreation services, the largest contributors to the decrease were membership
clubs, sports centers, parks, theaters and museums, based on credit card transactions
data, and gambling, based on data from state gaming control commissions.
For transportation services, the largest contributor to the decrease was air
transportation, based on data from the Department of Transportation and the
Transportation Security Administration.
Within equipment, the leading contributors to the decline were information processing
equipment, based primarily on Census manufacturers’ shipments and trade in goods
data, and transportation equipment, based on Ward’s Automotive Report data.
For structures, the decline was based primarily on two months of Census Value of
Construction Put in Place (VPIP) data and an adjustment to BEA’s standard projection for
construction activity in March.
Within exports, both goods and services declined in the first quarter. Within goods, declines in
both capital and consumer goods were partly offset by increases in industrial supplies and
materials as well as foods, feeds, and beverages, based primarily on Census U.S. International
Trade in Goods and Services and Census Advance Economic Indicators Report data. Within
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services, the largest contributor was travel, based primarily on data on international travelers
from U.S. Customs and Border Protection.
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The decrease in private inventory investment primarily reflected decreases in wholesale trade
and manufacturing that were partly offset by an increase in retail trade, based primarily on
Census inventory data.
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Within imports, the decline was widespread across the goods and services categories; the
largest contributors were travel services as well as capital and consumer goods, based on data
on U.S. travelers overseas from the Department of Homeland Security and Census U.S.
International Trade in Goods and Services as well as the Census Advance Economic Indicators
Report, respectively.
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Within residential fixed investment, the largest contributor to the increase was single family
structures, reflecting January and February Census VPIP data and a BEA assumption for March
based on housing starts.
Government spending increased in the first quarter, primarily reflecting an increase in nondefense
federal spending. For state and local government spending, an increase in investment in structures was
mostly offset by a decrease in consumption expenditures. Within consumption expenditures, the largest
contributor to the decrease was compensation. Real compensation of employees was adjusted to
account for disruptions in state and local education services resulting from the large number of school
closures that occurred in March. For more information, see “How does BEA measure public education
services during the closings of schools and college campuses in response to the COVID-19 pandemic?”
Prices
The price index for gross domestic purchases increased 1.6 percent in the first quarter, compared with a
1.4 percent increase in the fourth. Excluding food and energy, gross domestic purchases prices increased
1.9 percent, after increasing 1.3 percent.
The price index for personal consumption expenditures (PCE) increased 1.3 percent in the first quarter,
after increasing 1.4 percent in the fourth. Excluding food and energy, the PCE price index increased 1.8
percent, after increasing 1.3 percent. The acceleration in the PCE price index excluding food and energy
was led by an upturn in prices for clothing and footwear and an acceleration in financial services prices.
Disposable Personal Income
Real disposable personal income increased 0.5 percent in the first quarter, following a 1.6 percent
increase in the fourth. The increase in DPI was widespread; the largest contributor was government
social benefit payments.
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Within government social benefits, social security and unemployment insurance benefits
increased. The increase in social security largely reflected a cost of living increase that took
effect in January. The first-quarter increase in unemployment program benefits was based
primarily on unemployment insurance (UI) claims data from the Department of Labor’s
Employment and Training Administration, as claims posted record-high levels in late March.
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Within wages and salaries, an increase in government wages was partly offset by a decrease in
private wages. The estimates were primarily based on data from the BLS monthly Current
Employment Statistics report and additional information from the UI claims data for the latter
half of March. For more information, see “How did BEA adjust March 2020 wages and salaries to
account for the effects of COVID-19?”.
Personal outlays decreased in the first quarter, reflecting decreases in consumer spending and personal
interest payments. The decrease in personal interest payments partly reflected a decline in interest paid
on federally held student loans, as a provision from the Coronavirus Aid, Relief, and Economic Security
(CARES) Act provided for a suspension of interest accrual and payments due for a six-month period
beginning on March 13, 2020. For more information, see “How does the 2020 CARES Act affect BEA’s
estimates of personal interest payments?”.
The personal saving rate was 9.6 percent in the first quarter, compared with 7.6 percent in the fourth.
Federal Government Economic Response to the COVID-19 Pandemic
In March and April, four major legislative acts, including the CARES Act, were signed into law. The acts
established several temporary programs and provided additional funding for existing federal programs
to support individuals, communities, and businesses impacted by the pandemic. Because the effects of
the acts may be intermingled with other spending in the source data, BEA does not expect to be able to
separately identify the total quarterly or annual effect of the acts on GDP growth. However, given the
timing of the passage of the legislation, any impacts on first-quarter GDP growth were small.
BEA is actively tracking specific programs and provisions of the pandemic response legislation to
accurately classify the various programs in the national income and product accounts (NIPAs), including
provisions associated with the Paycheck Protection Program and the Economic Impact Payments. For
more details, see “COVID-19 Pandemic: Federal Recovery Legislation and the NIPAs” on BEA’s Web site.
Looking Ahead: 2020 Annual Update Scheduled for July 30th
BEA will release results from the 2020 annual update of the NIPAs on July 30, 2020, in conjunction with
the advance estimate of GDP for the second quarter of 2020. For estimates of real GDP and its major
components, the span of the update will cover the most recent five years (2015-2019) and the first
quarter of 2020. Estimates of income and saving will be subject to revision from 1999 through the first
quarter of 2020. More information on the 2020 annual update will be included in the forthcoming May
Survey of Current Business article, “GDP and the Economy.”
Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612
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@FedFRASER