Overall gross private domestic investment grew by 3.2% during the first quarter, driven mainly by housing purchases and construction. That’s up from the 0.7% pace logged during the fourth quarter.
Within that, residential fixed investment—which takes into account purchases of residential real estate and equipment that is owned by landlords and rented to tenants—grew by 13.9% during the first quarter, a pickup from the 2.8% pace at the end of last year.
The significant growth within residential fixed investment during the first quarter was largely a result of brokers’ commissions and other ownership transfer costs, as well as construction of single-family housing.
Nonresidential investment, which includes spending on items such as commercial real estate, tools, machinery, and factories, grew by 2.9% last quarter, a slightly slower pace than the previous quarter. A pickup in equipment and intellectual property products helped drive growth in this category.
Government consumption expenditures and gross investment grew by 1.2% during the first quarter, a slowdown from the fourth quarter’s 4.6% pace. The pullback was largely due to an outright decline in federal spending.
State and local government spending grew by 2% at the start of the year, compared with the fourth quarter’s 6% level. Much of the first-quarter spending was due to increased employee compensation.