First revisions to 4th quarter GDP data this morning did not improve as expected. Real GDP had been anticipated to increase to +.8%, but instead held steady at an anemic +.6% annualized growth rate. This compares negatively to the 4.9% growth observed in the third quarter.
As anticipated, exports were revised up to +4.8% from 3.9%, and imports were revised down to -1.9% from +.3%. The improvement in trade kept GDP from being negative last quarter, as net exports added +.9% to real GDP in the 4th quarter. GDP has grown every quarter since 2001. Government spending was revised lower, though non-defense spending rose. Inventories saw a larger than expected liquidation of -$10 billion versus the prior -$3.4B. In addition, gross private investment fell by -12.5% versus the previous -10.2%, and residential construction took off an even larger drop of -25.2% versus the originally reported decline of -23.9%. The drag from residential construction was the largest since 1981.
Personal consumption/consumer spending eased back to 1.9%, versus +2% originally reported, and has likely eased further in the first quarter as consumer sentiment has slumped. To add to the consumption problems, personal income growth was revised down to +4.1% from +4.5%, and is unlikely to recover rapidly as unemployment rises.
Though core PCE held steady at 2.7%, the headline index rose to 2.7% from the original estimate of +2.6%.
The final 4th quarter GDP figures will be released in March.
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