Real gross domestic product (GDP) is comprised of four major subcomponents: personal consumption expenditures, gross private domestic investment, net exports, and government consumption expenditures. In the latest Q1 2025 advance estimate update it was reported that real GDP decreased at an annual rate of 0.3%. Two of the four components made positive contributions.
Real gross domestic product (GDP) decreased at an annual rate of 0.3 percent in the first quarter of 2025 (January, February, and March), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent. The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment, consumer spending, and exports. (Link)
- Personal consumption expenditures (PCE) contributed 1.21
- Down from Q4 third estimate
- Gross private domestic investment (GPDI) contributed 3.60
- Up from Q4 third estimate
- Net exports of goods and services (NEGS) contributed -4.83
- Down from Q4 third estimate
- Government consumption expenditures (GCE) contributed -0.25
- Down from Q4 third estimate
Over time, the personal consumption expenditures (PCE) component has demonstrated the strongest and most consistent correlation with real GDP. When PCE is positive, GDP tends to be positive as well, and when PCE declines, GDP often follows—though there have been exceptions, such as in Q2 2022.
Visualizing Gross Domestic Product
The accompanying chart is a way to visualize real gross domestic product (GDP) change since 2007. The chart uses stacked columns to segment the four major components of GDP with a solid line overlay to show the sum of the four, which is real GDP itself. The data source for this chart is the Excel file accompanying the BEA's latest GDP news release (see the links in the right column). Specifically, it uses Table 2: Contributions to Percent Change in Real Gross Domestic Product.
Here is the same chart but only showing the latest two years to get a clearer picture of each components' most recent contributions.
Components as a Percent of Real GDP
Here is the latest break down of the components as a percent of real GDP:
As noted earlier, the personal consumption expenditures (PCE) component has demonstrated the strongest and most consistent correlation with real GDP. When PCE is positive, GDP is typically positive as well, and vice versa. Over time, PCE's share of GDP has grown, reflecting its increasing role in the economy. The chart below provides a snapshot of the PCE-to-GDP ratio since the inception of quarterly GDP data in 1947. The ratio currently stands at 69.48%, its all-time high.
GDP Components and Recessions
Let's conclude with a look at how the four GDP components behave inversely during recessions. PCE and GPDI typically rise as a share of GDP, while GCE and NEGS tend to decline during recessions. The chart below uses different vertical axes—PCE on the left and GPDI, GCE, and NEGS on the right—to emphasize these frequent inverse correlations.
Other GDP updates: Latest GDP Update and Real GDP Per Capita.
Read more updates by Jen Nash
