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Economy in Brief

US 4Q GDP Held at 0.6% Growth
by Tom Moeller February 28, 2008

U.S. real GDP growth during last quarter was unrevised at a 0.6% annual rate. The Commerce Department figure was just slightly below the Consensus expectation for an upward revision to a 0.8% rise. The gain still was down sharply from an average rate of growth during the prior two quarters of 4.4%.

As expected, improvement in the foreign trade deficit added more to growth last quarter as imports are now shown to have declined at a 1.9% rate, rather than rise sharply. Export growth also was revised slower to 4.8%.

Half of the addition to GDP growth from trade was offset by more of a subtraction from inventory decumulation.

The remaining half of the revision stemmed from slower estimated growth in final sales to domestic purchasers. The decline in residential construction was deepened slightly to -25.2% (-18.6% y/y) and that pulled 1.3 percentage points out of GDP growth. Growth in business fixed investment also was revised slightly slower to a 6.9% rise. Growth in real personal consumption was held about steady at 1.9%.

Growth in the GDP chain price index was added to slightly to a 2.7% (AR) gain. The PCE price index rose at a 4.1% rate which was revised up very slightly. Less food & energy prices rose at the same 2.7% rate as initially estimated.

Monetary Policy Actions and Long-Run Inflation Expectations is from the Federal Reserve Board and it can be found here.

Chained 2000$, % AR 4Q '07 (Preliminary) 4Q '07 (Advance) 3Q '07 Y/Y 2007 2006 2005
GDP 0.6 0.6 4.9 2.5 2.2 2.9 3.1
  Inventory Effect -1.5 -1.3 0.9 -0.2 -0.3 0.1 -0.2
Final Sales 2.1 1.9 4.0 2.7 2.5 2.8 3.3
Foreign Trade Effect 0.9 0.4 1.4 0.8 0.7 -0.1 -0.2
Domestic Final Demand 1.2 1.4 2.5 1.9 1.8 2.7 3.3
Chained GDP Price Index 2.7 2.6 1.0 2.6 2.7 3.2 3.2
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