1Q23 GDP: Surprise Upward Revisions

Bottom Line:  The third reading of 1st Quarter 2023 GDP was revised surprisingly higher, led by consumption. Consumer spending on services was notably higher, led by spending on health care. Nonresidential investment edged higher, but residential fixed investment was lower. Net exports were revised sharply higher. Looking through some more volatile components, real final sales were sharply higher, advancing 4.22% annualized versus 3.44% in the second estimate. Real final domestic demand was also higher, revised from 2.95% to 3.22%. Overall, these revisions suggest the consumer spent more on services late in the 1st Quarter than previously estimated. While a positive, it does little to change the trend, which is still towards a slow deceleration. That said, all signs point to the economy avoiding recession amid slow but positive growth over the remainder of the year.