The Economy

First-Quarter U.S. GDP Revised Upward

June 29, 2005

A month before the slated release of its first estimate of U.S. GDP performance during the second calendar quarter of this year, the U.S. Commerce Department on June 29 offered its third and final read on GDP growth in the first quarter of 2005. Matching the fourth-quarter rate in 2004, the U.S. economy grew at an annual rate of 3.8%, higher than its earlier figures of 3.1% and 3.5%, the department said. Higher than previously reported business fixed investment, particularly in equipment and software, accounted in part for the higher final GDP figure for the first quarter of 2005.

The market value of GDP in the first quarter -- the so-called current-dollar GDP -- was at a seasonally adjusted annual mark of $12.192 trillion.

However, Merrill Lynch & Co., New York, continues to believe that the first quarter "will mark the high-point on growth in 2005." Inventories are the issue. Although it was revised downward in the latest report from Commerce, inventory accumulation in the first quarter was still "outsized," contends Merrill. "The unwinding of this unplanned stockpiling will exert a significant drag on economic growth in the second quarter," judges the financial firm.

Inflation, as measured by the Federal Reserve's favored index of personal income expenditures minus food and fuel -- rose at a seasonally adjusted annual rate of 2% in the first quarter, the highest it has been since the first quarter of 2004. That makes it virtually certain that the Federal Open Market Committee will boost the target for the influential federal funds rate by 25 basis points to 3.25% at the close of a two-day meeting in Washington, D.C., on June 30.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.