Global| Jan 30 2002Unexpected Rise in Real GDP
by:Tom Moeller
|in:Economy in Brief
Summary
GDP unexpectedly rose last quarter due to a decline in the price deflator, the first decrease in nearly 50 years. Price decline and/or weakness was widespread. Only prices in the residential investment (3.0%) and personal consumption [...]
GDP unexpectedly rose last quarter due to a decline in the price deflator, the first decrease in nearly 50 years.
Price decline and/or weakness was widespread. Only prices in the residential investment (3.0%) and personal consumption (0.8%) categories rose. Elsewhere prices fell. Nonresidential fixed investment: -1.8%. Exports: -3.2%. Government: -0.7%.
Strength in inflation-adjusted PCE (5.3%) led the surge in real final domestic demand. Real government spending also surged led by higher defense spending. Elsewhere, demand fell with both residential and business fixed investment down sharply.
The rate of inventory decumulation by far set a record, nearly doubling versus 3Q. As a percentage of GDP the rate of decumulation was a third higher than the prior peak set in 4Q82.
The net export deficit unexpectedly deteriorated due to a sharp drop in exports.
| Chained '96 $, % AR | 4Q '01 (Advance) | 3Q '01 | Y/Y | 2001 | 2000 | 1999 |
|---|---|---|---|---|---|---|
| GDP | 0.2% | -1.3% | 0.1% | 1.1% | 4.1% | 4.1% |
| Inventory Effect | -2.3% | -0.8% | -1.6% | -1.1% | -0.2% | -0.2% |
| Final Sales | 2.5% | -0.5% | 1.7% | 2.2% | 4.3% | 4.3% |
| Trade Effect | -0.7% | -0.2% | 0.0% | -0.1% | -0.6% | -0.9% |
| Domestic Final Demand | 3.2% | -0.3% | 1.7% | 2.3% | 4.9% | 5.2% |
| Chained GDP Price Deflator | -0.3% | 2.3% | 1.8% | 2.2% | 2.3% | 1.4% |
by Tom Moeller January 30, 2002
The Federal Reserve left the Federal Funds Target Rate unchanged at 1.75%, as expected.
The press release, which accompanied the Fed’s action, contained the following statement. "Signs that weakness in demand is abating and economic activity is beginning to firm have become more prevalent."
The complete text of the Fed's latest press release can be viewed here.
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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