Revised GDP Data Show Contractions in Income and Profits in Q1-2023

Source: Economics Group of Wells Fargo Bank, N.A.


  • The second estimate of real GDP growth showed the U.S. economy expanded at an annualized rate of 1.3% in the first quarter, up about two-tenths of a percentage point from the preliminary estimate.
  • The modest upward revision to Q1 GDP growth does not really change the overall narrative of the economy at present. Incoming data beyond Q1 show the economy continuing to grow, albeit at a sub-trend level. • Today’s release also included the first look at the income side of the National Income and Product Accounts (NIPA). To that end, real gross domestic income (GDI) contracted at a 2.3% annualized rate in Q1, demonstrating notably weaker growth.
  • Corporate profits slipped 5.1% (not annualized) in the first quarter. Profit growth has slowed in recent quarters. Profits have now slipped for three straight quarters and slipped on a year-ago basis for the first time in two years.
  • Profits tend to peak ahead of a broader economic recession. We look for further weakness in profit growth over the course of the year. Dwindling profits and heightened uncertainty leave firms with less means and desire to invest.
  • Although we believe that the U.S. economy is not in recession at present, we continue to believe that it is tracking toward a downturn later this year. Not Much Upside From Upward Revision Revised data that were released this morning showed that real GDP expanded at a 1.3% annualized rate in Q1-2023, which was higher than the first estimate of 1.1% that was released a month ago. READ FULL ARTICLE >>