Global| Feb 25 2011U.S. GDP Growth, Surprisingly, Is Revised Down
by:Tom Moeller
|in:Economy in Brief
Summary
Real GDP growth during Q4 was reduced to 2.8% (SAAR) from the advance report of 3.2%. The revision was due to weakened growth in domestic final demand. The GDP figure was well below Consensus expectations for a revision to 3.6%. [...]
Real GDP growth during Q4 was reduced to 2.8% (SAAR) from the advance report of 3.2%. The revision was due to weakened growth in domestic final demand. The GDP figure was well below Consensus expectations for a revision to 3.6%. Nevertheless, growth remained the strongest since Q1 2010. For the full year, real GDP rose a moderate 2.8% and recouped the 2.6% lost during 2009.
Growth in domestic final demand was the main factor behind the downward revision to GDP. During Q4, its increase was lessened to 3.1% (AR) from 3.4% gain (AR), but that still was enough to pull the annual increase up to a moderate 1.8%, the most since 2006. Personal consumption grew at a lessened 4.1% rate, but growth in business investment was raised to 5.3%, though that still was its weakest of the economic recovery. Residential investment grew at a lessened 2.7% rate. Government spending fell at a lowered 1.5% rate led by a deepened 2.4% decline in state & local spending, down 1.4% for the full year due to lower tax receipts. Federal spending fell slightly (+4.8%) for the first down quarter since Q1 2009.
Growth in real final sales overall was lessened to 6.7% from 7.1% due to the revisions to domestic demand. An unchanged, positive foreign trade effect of 3.4 percentage points was fueled by exports which rose at a 9.6% rate (9.2% y/y) while imports fell at a 11.4% (+11.0% y/y) rate. It reversed most of the Q3 increase. A slower rate of accumulation offset the add from foreign trade, and the estimate was unchanged. Inventories subtracted 3.7 percentage points from Q4 growth, the most since Q1 1988.
Price inflation as measured by the chained GDP price index rose at 0.4% rate, slightly more than initially reported. The personal consumption chain price index rose an increased, but unrevised, 1.8% (1.2% y/y). The price index for fixed business investment also rose by an unchanged 0.8% (-0.2% y/y) but the residential investment price index rose at an increased 3.0% rate (0.0% y/y). That compares to a 3.4% decline during all of last year. The GDP figures are available in Haver's USECON and USNA databases and the expectations number is in AS1REPNA.
| Chained 2005 $, % AR | Q4'10 (Prelim.) | Q4'10 (Adv.) |
Q3'10 | Q2'10 | Q4 Y/Y |
2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|---|
| GDP | 2.8 | 3.2 | 2.6 | 1.7 | 2.7 | 2.8 | -2.6 | -0.0 |
| Inventory Effect | -3.7 | -3.7 | 1.6 | 0.8 | 0.3 | 1.5 | -0.5 | -0.5 |
| Final Sales | 6.7 | 7.1 | 0.9 | 0.9 | 2.4 | 1.4 | -2.1 | 0.5 |
| Foreign Trade Effect | 3.4 | 3.4 | -1.7 | -3.5 | -0.4 | -0.5 | 1.0 | -1.1 |
| Domestic Final Demand | 3.1 | 3.4 | 2.6 | 4.3 | 2.8 | 1.8 | -3.1 | -0.6 |
| Demand Components | ||||||||
| Personal Consumption | 4.1 | 4.4 | 2.4 | 2.2 | 2.6 | 1.8 | -1.2 | -0.3 |
| Business Fixed Investment | 5.3 | 4.4 | 10.0 | 17.2 | 10.0 | 5.6 | -17.1 | 0.3 |
| Residential Investment | 2.7 | 3.4 | -27.3 | 25.6 | -4.7 | -3.0 | -22.9 | -24.0 |
| Government Spending | -1.5 | -0.6 | 3.9 | 3.9 | 1.2 | 1.0 | 1.6 | 2.8 |
| Prices | ||||||||
| Chained GDP Price Index | 0.4 | 0.3 | 2.1 | 1.9 | 1.4 | 1.0 | 0.9 | 2.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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