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Economy in Brief

U.S. GDP Growth Is Revised Up Slightly in Q4'21
by Tom Moeller  February 24, 2022

• Inventories remain the main impulse for growth.

• Domestic final demand growth raised. Foreign trade effect turns negative.

• Price inflation strengthened.

Economic improvement in the fourth quarter of 2021 was slightly better than measured initially. Real GDP growth in Q4'21 accelerated to 7.0% (SAAR) from 2.3% in Q3. This estimate compares to the initial estimate of 6.9% growth. It remained the strongest growth since Q3'20. During all of 2021, growth picked up to 5.7%, the fastest increase since 1984. A 7.1% GDP rise in Q4 had been expected in the Action Economics Forecast Survey.

Inventories contribution to growth was unchanged at 4.9 percentage points.

Domestic final sales growth was raised to 2.0% (5.4% y/y) from 1.9%. Business fixed investment grew 3.1% last quarter (6.6% y/y), revised from 2.0% estimated earlier. Equipment outlays rose 2.4% (6.3% y/y), revised from 0.8%. Investment in intellectual property strengthened an unrevised 10.6% (11.9% y/y) in Q4. Structures investment fell 9.4% (-2.9% y/y), revised from -11.4%.

Also adding to growth, residential investment outlays increased 1.0% (-11.7% y/y), revised from a 0.8% decline estimated earlier.

Offsetting these additions, consumer spending growth was lessened to 3.1% (7.0% y/y) from 3.3% as spending on services rose 3.9% (6.9% y/y). Recreation outlays rose 13.7% (26.9% y/y) and transportation spending surged 16.8% (29.3% y/y). These two gains were shaved. Housing & utilities spending edged 0.5% higher (1.1% y/y), revised from 0.2%. Spending on durable goods rose 2.7% (6.7% y/y) including a 4.0% decline (-3.3% y/y) in expenditures on motor vehicles and an 12.3% surge (13.4% y/y) in spending on recreational goods. These two gains were lifted. Nondurable goods spending increased 0.8% (7.9% y/y), revised from -0.1% as the decline in apparel outlays was lessened to 1.9% (+16.2% y/y) from 2.4%.

An increased 0.1 percentage point deterioration in the international trade effect compared to no effect on growth that was estimated earlier. It followed subtractions from growth in the prior five quarters. Exports grew 23.6% (5.2% y/y) compared to 24.5% estimated earlier while imports rose 17.6% (9.6% y/y), revised from 17.7%.

The decline in government spending was lessened to 2.6% (+0.1% y/y) from 2.9%. Federal government outlays fell a slightly increased 4.5% (-1.1% y/y) owing to a 6.1% drop (-3.7% y/y) in defense spending. State & local government purchases weakened a lessened 1.4% (+0.9% y/y).

The estimate of pricing pressures was increased, and it remained strong last quarter. The GDP price index rose 7.1% (5.9% y/y), revised from 6.9%, after a 6.0% Q3 gain. A steady 6.9% rise had been expected. The rise in the residential investment price index was lifted to 12.1% (13.6% y/y) from 9.5% estimated initially. Growth in the business fixed investment price index was strengthened to 7.7% (3.4% y/y) from 7.5%. Offsetting these changes, strength in the personal consumption price index was lessened to 6.3% (5.5% y/y) from 6.5% estimated last month.

The GDP figures can be found in Haver's USECON and USNA databases. 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) Q4'21 (2nd Estimate) Q4'21 (Advance Estimate) Q3'21 Q2'21 Q4'21 Y/Y 2021 2020 2019
Gross Domestic Product 7.0 6.9 2.3 6.7 5.6 5.7 -3.4 2.3
  Inventory Effect (% point) 4.9 4.9 2.2 -1.3 1.2 0.3 -0.5 0.1
Final Sales 2.0 1.9 0.1 8.1 4.7 5.4 -2.9 2.2
  Foreign Trade Effect (% point) -0.1 0.0 -1.3 -0.2 0.7 -1.1 -0.4 -0.2
Domestic Final Sales 2.0 1.9 1.3 8.0 5.4 6.5 -2.5 2.4
Demand Components
  Personal Consumption Expenditure 3.1 3.3 2.0 12.0 7.0 7.9 -3.8 2.2
  Nonresidential Fixed Investment 3.1 2.0 1.6 9.2 6.6 7.3 -5.3 4.3
  Residential Investment 1.0 -0.8 -7.7 -11.7 -1.7 9.0 6.8 -0.9
  Government Spending -2.6 -2.9 0.9 -2.0 0.1 0.5 2.5 2.2
Chain-Type Price Index
   GDP 7.1 6.9 6.0 6.1 5.9 4.2 1.3 1.8
    Personal Consumption Expenditure 6.3 6.5 5.3 6.5 5.5 3.9 1.2 1.5
       Less Food & Energy 5.0 4.9 4.6 6.1 4.6 3.3 1.4 1.7
    Nonresidential Investment 7.7 7.5 4.3 0.9 3.4 1.5 0.6 1.3
    Residential Investment 12.1 9.5 14.8 15.3 13.6 10.8 3.3 2.9
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