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Economy in Brief

US 3Q GDP Revised Up
by Tom Moeller December 22, 2004

The "final" revision to US real GDP last quarter indicated 4.0% (AR) growth, up from the preliminary reading of 3.9% and the advance report of 3.7% growth. The Consensus expectation had been for no change at 3.9% growth.

The decline reported last month in corporate profits w/inventory (IVA) and capital consumption adjustments (CCAdj) was doubled to -4.8% (+5.8% y/y), the first quarterly decline since 1Q03. US nonfinancial corporate sector profits were little revised and rose 1.5% (18.8% y/y) but the decline in financial sector earnings was deepened to 19.8% (-17.0% y/y) from -13.4%.

Revisions to growth in domestic final demand were minimal. Personal consumption grew at a 5.1% (3.6% y/y) rate and business investment grew at a 13.0% rate (10.1% y/y). Residential investment grew at a 1.6% rate (8.0% y/y).

Slower accumulation of inventories subtracted slightly more than estimated earlier and twice the 0.5 percentage points estimated in the advance report and the drag from foreign trade was eased as import growth was lessened to 4.6% (11.1% y/y).

The estimate of price inflation was raised slightly to 1.4% (AR) as the PCE chain price index rose 1.3% (2.2% y/y) and the private fixed investment index rose 3.0% (3.0% y/y). A 5.1% gain in import prices held back the gain in GDP chain price index.

"Productivity Gains Showing Up in Services" from the Federal Reserve Bank of Dallas is available here.

Chained 2000$, % AR 3Q '04 (Final) 3Q '04 (Prelim.) 2Q '04 Y/Y 2003 2002 2001
GDP 4.0% 3.9% 3.3% 4.0% 3.0% 1.9% 0.8%
  Inventory Effect -1.0% -0.9% 0.8% 0.4% -0.1% 0.5% -0.8%
Final Sales 5.0% 4.9% 2.5% 3.6% 3.1% 1.4% 1.6%
  Trade Effect -0.1% -0.3% -1.0% -0.5% -0.3% -0.7% -0.2%
Domestic Final Demand 4.9% 4.9% 3.5% 4.1% 3.4% 2.1% 1.8%
Chained GDP Price Index 1.4% 1.3% 3.2% 2.3% 1.8% 1.7% 2.4%
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