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Economy in Brief

U.S. GDP Growth Revised Up Minimally in Q4'20
by Tom Moeller  February 25, 2021

• Year-end GDP growth remains markedly below Q3's growth with broad-based component weakening.

• Decline in activity during all of 2020 remains largest of post-WWII period.

• Price gains remain lower in Q4.

Real GDP rose 4.1% (SAAR) during Q4'20 (-2.4% y/y) following a record 33.4% gain during Q3. The rise was increased from 4.0% reported initially and it matched expectations in the Action Economics Forecast Survey. Combined with declines during Q1 and Q2, GDP fell 2.4% Q4/Q4.

Inventory accumulation added 1.1 percentage points to growth last quarter, revised from 1.0, after adding 6.6 points in Q3. Foreign trade deficit deterioration subtracted an unrevised 1.5 percentage points from growth. Exports rose 21.8% (-11.0% y/y) following a 59.6% rise while imports strengthened 29.6% (-0.6% y/y) after surging 93.0%.

Domestic final sales increased an unrevised 4.4% (-1.5% y/y) following a 29.8% Q3 gain which recovered the prior quarter's decline. Consumer spending rose a lessened 2.4% (-2.6% y/y) following a 41.0% Q3 rebound and a 33.2% Q2 decline. Durable goods spending eased 0.6% (+11.8% y/y) after gaining 82.7% in Q3. Nondurable goods spending slipped an increased 1.1% (+4.2% y/y) following a 31.1% gain. Outlays on services increased an unrevised 4.0% (-6.8% y/y) following a 38.0% Q3 rise.

Nonresidential fixed investment grew a little-revised 14.0% (-1.2% y/y) following a 22.9% rebound, after three quarters of decline. Building investment grew 1.1% (-14.5% y/y) which was slightly reduced. It followed four straight quarters of decline. Equipment investment surged more than one-quarter (3.5% y/y) after rising slightly more than two-thirds in Q3.

Residential investment increased by an upwardly revised 35.8% (14.1% y/y) following a two-thirds increase in Q3.

The 1.1% decline (-0.6% y/y) in government spending last quarter was slightly less than reported initially and followed a 4.8% drop. State and local government spending fell 1.2% (-2.4% y/y), the third consecutive quarterly shortfall. A 0.9% easing (+2.4% y/y) in federal government spending followed a 6.2% Q3 fall.

The 2.1% increase (1.3% y/y) in the GDP price index was revised up slightly. A 2.0% gain had been expected. The PCE price index gained 1.6% (1.2% y/y), roughly half the Q3 increase. The price index less food & energy was also unrevised at 1.4%, easing from 3.4% in Q3. The business fixed investment price index posted another weak increase, up 0.1% (0.5% y/y) and revised from 0.4%. The residential investment price index strengthened an upwardly revised 6.9% (4.9% y/y) after rising 9.5% and the government sector price index rose an unrevised 2.8% (1.3% y/y), about as it did in Q3.

The GDP figures can be found in Haver's USECON and USNA database. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts. Both databases include tables of the newly published not seasonally adjusted data. The Action Economics consensus estimates can be found in AS1REPNA.

Chained 2012 $ (%, AR) Q4'20 (2nd Estimate) Q4'20 (1st Estimate) Q3'20 Q2'20 Q4'20 Y/Y 2020 2019 2018
Gross Domestic Product 4.1 4.0 33.4 -31.4 -2.4 -3.5 2.2 3.0
  Inventory Effect (%-point)  1.1 1.0 6.6 -3.5 -0.3 -0.3 0.0 0.2
Final Sales 3.0 3.0 25.9 -28.1 -2.7 -2.9 2.2 2.8
  Foreign Trade Effect (%-point) -1.5 -1.5 -3.2 0.6 -1.2 -0.2 -0.1 -0.2
Domestic Final Sales 4.4 4.4 29.8 -27.1 -1.5 -2.7 2.3 3.0
Demand Components
  Personal Consumption Expenditure 2.4 2.5 41.0 -33.2 -2.6 -3.9 2.5 2.7
  Nonresidential Fixed Investment  14.0 13.8 22.9 -27.2 -1.2 -3.7 2.5 6.9
  Residential Investment 35.8 33.5 63.0 -35.5 14.1 4.2 -0.1 -0.6
  Government Spending -1.1 -1.2 -4.8 2.5 -0.6 0.4 3.0 1.8
Chain-Type Price Index
   GDP 2.1 2.0 3.5 -1.8 1.3 1.2 1.8 2.4
    Personal Consumption Expenditure 1.6 1.5 3.7 -1.6 1.2 1.2 1.5 2.1
       Less Food & Energy 1.4 1.4 3.4 -0.8 1.4 2.4 1.7 2.0
    Nonresidential Investment 0.1 0.4 0.1 0.8 0.5 0.5 1.3 0.9
    Residential Investment 6.9 6.0 9.5 1.0 4.9 3.3 2.8 5.6
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