Final Q4 GDP Revision Comes In At 5.6%, Total Real Debt To GDP 130.6%

Tyler Durden's picture

Full GDP release from the BEA.

Key highlights:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.6 percent in the fourth quarter of 2009, (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.2 percent.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, an upturn in nonresidential fixed investment, an acceleration in exports, and a deceleration in imports that were partly offset by decelerations in PCE and in federal government spending.

Revision basis:

The third estimate of the fourth-quarter increase in real GDP is 0.3 percentage point, or $11.6 billion, lower than the second estimate issued last month, primarily reflecting downward revisions to nonresidential fixed investment, to private inventory investment, and to PCE.


The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.0 percent in the fourth quarter, 0.1 percentage point more than in the second estimate; this index increased 1.3 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.5 percent in the fourth quarter, compared with an  increase of 0.3 percent in the third.

The communist government:

Real federal government consumption expenditures and gross investment were unchanged in the fourth quarter, compared with an increase of 8.0 percent in the third. National defense decreased 3.6 percent, in contrast to an increase of 8.4 percent. Nondefense increased 8.3 percent, compared with an increase of 7.0 percent. Real state and local government consumption expenditures and  gross investment decreased 2.2 percent, compared with a decrease of 0.6 percent.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 6.1 percent, or $211.7 billion, in the fourth quarter to a level of $14,453.8 billion. In the third quarter, current-dollar GDP increased 2.6 percent, or $90.9 billion.

Total debt: $12.606 trillion. Debt to GDP: 87.2%. Adding $6.264 trillion in GSE debt which is explicitly backed and should be on the Treasury's book, the total debt is $18.87 trillion and the Total Adjusted Debt to GDP is 130.6%. Total on and off balance sheet debt to GDP: ridiculous.

Some views from Stone McCarthy:

The Bureau of Economic Analysis (BEA) reported a downward adjustment in its final estimate of Q4:09 GDP from last month's preliminary estimate. Fourth quarter GDP growth is now seen expanding at a 5.6% rate, 0.4% less rapid that last month's second or preliminary estimate of a 5.9% advance which itself was revised up from the first estimate of 5.7% growth reported in January. There were generally small but one-sided revisions to the several GDP components between this final report and the preliminary estimate and those adjustments netted out in aggregate to a downward revision of $11.6 billion. The lower level of Q4 GDP was largely due to a slightly faster pace of inventory liquidation and a lower estimate of nonresidential fixed investment. In sum, the revisions do not alter our view that the economy expanded at a tepid 2.5% rate in the nearly complete first quarter.

Given the modest magnitude of the downward revision to Q4 GDP, and given that these final revisions are released three months after the end of the quarter, and given that the revisions do not alter the economic outlook, the muted financial markets reaction to the revised data was warranted. This final GDP report provides no new insights about the economy. The February personal income and spending data to be released Monday will provide greater insight into how the economy is performing during the first quarter. The economy in the first quarter appears to have expanded at a tepid 2.5% rate. We see further recovery during 2010 at a subdued rate of about 2.0% to 3.0% as the impact of macro-economic stimulus, both monetary and fiscal, begins to lose strength.

Coming after the Federal Reserve's March 16 decision to maintain the essentially flat fed funds rate target of 0.0% to 0.25% and well before the next FOMC meeting on April 27 -28, these final fourth quarter GDP data will little influence on the conduct of monetary policy over the coming months. Incoming economic data pertaining to the first and second quarters of 2010 will determine the speed at which Fed officials begin to implement the exit strategy sometime in 2010. Given the ongoing weakness in the residential sector and the uneven nature of overall economic growth, we expect the Fed to hold interest rate policy steady for a while longer. Based on our forecast that Q1:09 GDP will expand at a 2.5% rate and may grow at a 2.5% rate during the second quarter, it is our expectation that the FOMC will hold the fed funds target range at 0% - 0.25% well into the second half of 2010.


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hedgeless_horseman's picture

Don't worry.  That whole debt to GDP ratio is no problem, folks, because:

"Say baby, you still love Big Barry's AAA looonnng time, right?"

Cursive's picture

TD, how dare you not engage in accounting gimmickry by adding GSE debt to the official debt total.  I wonder what the total is if you include all of the unfunded contingent liabilities of that wonderful safety net we call Social Security.

Cookie's picture

United States of Dubai

MsCreant's picture

There is something to that. The dollar is backed up by Arab oil promises and our military might to protect said Arabs and the oil.

Joe Davola's picture

If the reports of the economies of the oil-rich arab nations are even close to true, what happens to the restless masses when the oil dries up and the rulers have decamped to less tumultuous shores leaving the peasantry without the pittance that currently trickles down.  If there's unrest now, it's gonna get real ugly.

Problem Is's picture

"what happens to the restless masses when the oil dries up and the rulers have decamped to less tumultuous shores leaving the peasantry without the pittance that currently trickles down..."

Where the US has been...

Thanks to depleted uranium, said masses should be dead of cancer, dying of cancer or deformed. Then spreading peace and democracy should be a cake walk for the Legions of Alexander Severus...

As for the Saudis

US Empire to Sauds: "No oil. I don't know you."

Problem Is's picture

I hate the NSA monitored/jacked up my connection double post...

Mako's picture

Let me see credit creation is -136B for the 4Q and we are set for "gains".  Good luck with all that.

B9K9's picture

Mako, I tried to post this comment over at your blog, but it was blocking me out for some reason:

Sure you can pay compounding, accruing principal+interest in a declining credit-money system. All you have to do is make certain sacrifices & cut-backs in other areas. Some suggestions would be: food, water, shelter, clothing, medical, etc.

I'm sure you get the picture. We must honor our contractual obligations, even if our representatives fraudulently sold our collective souls into debt slavery many, many generations ago.

The only other alternative is the reason governments don't last. My personal focus is on two things:

  1. Surviving the coming shit-storm; and
  2. Helping establish a new non-debt monetary system after the dust settles (assuming I accomplish #1).
suteibu's picture

130%?  Yawn.  Japan has set a much higher bar.  But don't worry, in the spirit of American competitiveness, this government will break it. 

There can be only one!

MsCreant's picture

Does Japan have the future entitlements that are expected to be paid out that we do?

suteibu's picture

Yes.  But it gets worse for them.  The new government there is acting a lot like the new government here.  There isn't a stimulus big enough for them.  PM Hatoyama wants to turn East Asia into another EU. 

Back to the future entitlements, most of it is invested in the Japanese national debt.    The Japan pension fund that invests the retirement funds has already told the government that they wouldn't purchase more debt in the future. There will be few places for them to sell that debt outside of Japan.

Meanwhile the oft-touted Japanese household savings rate has plunged during this recession.  Japan is getting squeezed pretty badly and are hanging their hopes on Obama and the US.  Of course, the trade war talk between the US and China scares the crap out of them.

Hansel's picture

Debt is money.  We're getting rich!!!

Mako's picture

Credit/debt is collapsing not expanding, so you are getting poorer not richer. 

Eventually the credit system will collapse completely once all the upright monkeys figure out you can't escape the equation, then you will realize what poor really is.


MsCreant's picture

I rather thought Hansel was being, er, caustic.

Mako's picture

Hard to tell in today's world, I have talked to Economic Professor's that thought the Total Credit System could be paid off.   There are some backwards people in this world.  

Hansel's picture

I'm a 'professor' at the Derek Zoolander Center for Children Who Can't Read Good.  You should sit in on one of my classes sometime because clearly you missed a key point... WE'RE GETTING RICH!!!

Cognitive Dissonance's picture

Are YOU the professor who keeps flunking me just because I can read :>)

WaterWings's picture

Yes. Because grading is subjective "total improvement" over employable skills.

Stranger's picture

Someone sure is getting rich by printing you some debt.

MsCreant's picture

I have typed and retyped several responses. I am floored by how this keeps going on and on. Floored. The planet is insolvent, the system surreal and absurd. Not enough people want to face it, own it, and try to fix it because 1. It is cyclical if you do fiat/fractional reserve systems, thus expected and 2. Too much of the population would need to be incarcerated and/or executed.

In a personal relationship, you can ask for a divorce, break-up, leave. Here, those of us who want to work on it are stuck with those who don't, controlling reality.

This bites big smelly ones sooo bad. I hate it, hate it, hate it.

William Wallace's picture

It's too bad that we don't have a word for a government that is run by the banks.  We have plenty of other words for governments:  autocracy, aristocracy, democracy, kleptocracy.  But the word "bankocracy" is not in use.  Maybe that word, or some other word, will start being used someday to describe the government we have.

For every dollar in that $18.87 trillion debt, there was a banker or bond trader that made money from it.  If that Federal debt collapses, then bankers will be standing by to create another mountain of debt to replace it.  Creating debt mountains is what they do.  The Federal government just exists to provide them with the supporting infrastructure they need in order to succeed at creating debt mountains. 

Cognitive Dissonance's picture


Think about how many people are "trapped" in bad marriages because they don't wish to do anything about it for any number of reasons. Now consider how many people feel "trapped" by this corruption and out of control debt but don't wish to do anything about it for a variety of reasons.

I've been reading about tyranny and dictators over the past few weeks. In each case, the actual dictator does/did/would not have the resources to control the country if only a small percentage of the population were to revolt. Yet the dictator maintains control for decades. Why?

Because it's a psychological, not physical, control that is ultimately suppressing the population and empowering the dictator. Techniques are used by the dictator to psychologically and emotionally separate and isolate each member of the country, thus convincing nearly everyone they have no power, that they've already lost and there's no use in even trying to resist. This is why this has gone on for as long as it has and why it will get much worse before it gets better.

This is also why I talk about psychology all the time. An individual who hides from him or herself is easily controlled by the forces he or she desperately tries to avoids recognizing or acknowledging. An individual who knows him or herself is a supremely powerful being.

MsCreant's picture

On target, as usual, brother man. You know what the killer is? When you work on things, face the tough times together, and get through it, you are stronger on the other side and IT FEELS WONDERFUL. You create a space/situation that can handle more and get more clear in the future. What you thought was gonna hurt, does not hurt nearly as much as the effort that went into propping up the bad construct.

What I am talking about is better than drugs, genuine connection. To further your discussion on dictators, you must foster disconnect to cultivate the desired result. We are plugged in, but disconnected as a culture. Disconnected from the sources of our food, shelter, and other material aquisitions. Disconnected from the earth and her cycles. Disconnected from each other. And most of all disconnected from our selves. Out of this disconnection is spawned a hunger and yearning so desperate that we look to consume (food, electronics, media, mood enhancers) to fill the void. That disconnection drives the marketing machine that enables the exponential consumption insanity that we call modern culture. The activities we engage in to fill the void, keep us anesthetized and unaware of our real needs, the need for connection. This is where vampire sqid feed.

Little morning rant. I'll go to my corner now.

Cognitive Dissonance's picture

Edward Bernays (nephew of Freud) taught this concept to both Madison Avenue and Pennsylvania Avenue when he instructed others how to manufacture consent. Since (wo)man is an inauthentic soul and lives an inauthentic life, it's very easy to tap into (wo)mans inner fears and phobias and irritate them, causing the person to seek relief in whatever form is thrust in front of them while they're being irritated.

See this wonderful automobile your friends and neighbors have but you, you worthless, stupid, sexually inept wretched example of a male don't have but could if only you enter into a wage slavery agreement with your friendly local banker. See this wonderfully (and unnaturally) slender and anorexic example of (artificially induced) male fantasy modeling the latest fashions as she drapes herself all over that shiny male phallic symbol with 4 wheels and air conditioning? While you'll never be that skinny, exotic or desirable, you can try real hard by signing on the dotted lined (with your local banker) of a life time agreement of voluntary wage slavery.

WaterWings's picture

In that same vein of thinking, does this programmed insecurity also help explain the growing achievement gap between men and women these days? Last I read, the only state in the "Union" that still has > 50% male graduates from higher education is Utah - and the leaders there try to "address" the problem, but everyone knows that a very large percent of the females in Utah don't really want to go out and get a job - they want to be homemakers, and know that they can get a better selection at the universities.


juangrande's picture

Ms.Creant Nothing to fear but fear itself? Sounds like you have investigated your personal "root cellar" some. In my experience in there lies all that keeps you from the "connection" of which you speak.  That is what we avoid and only by doing nothing, especially with our minds, for several minutes a day can we begin to get a sense of the lie that we live. But try selling that during an NFL game!

MsCreant's picture

Nice to meet you juangrande. I have let myself drift from my practice of "doing nothing" and taken myself and the situation a little too seriously lately, but I had a reconnecting/repairing recently that reminded me.

So did you.

I will look for you around the blog. ;-)

Cognitive Dissonance's picture

"That is what we avoid and only by doing nothing, especially with our minds, for several minutes a day can we begin to get a sense of the lie that we live."

Meditation, even just being quiet for 10 or 20 minutes, scares the hell out of many people because they aren't "doing" something, anything, in a desperate attempt to avoid themselves.

About 15 years ago I was riding my motorcycle alone through the mountains of Virgina and I pulled over at a rustic rest stop on the Skyline Drive. Upon pulling in, I saw a group of about 20 motorcyclists (all male-female couples) and parked next to them. After some small talk one of the females asked me a question.

"Don't you riding alone?" To which I replied "I think I'm very good company with myself and rather enjoy the solitude of solo riding." This response both fascinated and frightened many of the other riders and the group tightened around me as they asked me follow up questions, which were basically just variations of "aren't I lonely?".

After I would not waver in my expressed desire to be alone at times, to think and ponder and just enjoy the world and myself, they quickly dispersed, getting back on their bikes and riding off. Many glanced back to have one more look at the monster they'd discovered in the mountains of Virginia.

Hulk's picture

I drove the blue highways of the country on my bike in summer of 86, by myself.Best time of my life and my mind was so clear....

I also walk the woods off of skyline drive often, but especially when the mountain blueberries  arein season.Acres and acres of blueberries in those blue ridge

Hulk's picture

aux grands maux, les grands remèdes

Stranger's picture

The power of dictators relies on fear, but not on the fear of the dictator - the fear that what would replace him would be much worse. (See Iraq)

Learn history. You might not be able to stop the collapse, but at least you won't fear it anymore.

Crummy's picture

The world has become a series of strategically placed loan sharks that stand between people and every decision they make.

Freedom isn't free, but at these prices it's like we're giving it away. 0% financing available for qualified FDIC members.


Neophiliac's picture

Errr... two points:

1. If counting liabilities of GSEs, DO be so kind as to count their assets too. 'Tis true that they are holding a bunch of crappy mortgages, but their holdings aren't worth zero.

2. Stop using the word "communist" when referring to this administration. It discredits the site wholesale.  

TBH, I am not sure why I'm reading this anymore - the quality of informational content is usually inversely proportional to the amount of politics that permeates the discussion. And the amount of politics has definitely been on the rise around here.

William Wallace's picture

If the Feds used anything approaching honest accounting, they would also show their liabilities for future Social Security, Medicare, and Obamacare payments.

Put those in the mix, and the debt rises to more than $50 trillion.  I'm not sure how high.  Maybe $100 trillion.  What does it matter?

This site talks more about politics these days because the investment marketplace is totally politicized.  Fundamental securities analysis is dead; it is a joke.  Investors  must now function like Kremlinologists used to.   They must try to guess the secret plans of the powers that be.  We can only invest rationally AFTER we understand their plans for manipulating prices.

Crummy's picture

National debt + Unfunded liabilities = over $120,000,000,000,000

Hansel's picture

Our 79.9% stake in AIG means AIG should also be consolidated to the federal balance sheet.  If anyone else who owned 79.9% of a company didn't move the company to his own balance sheet, they would be busted by the IRS.  But when the government does it, it's not illegal.

Double down's picture

Good reply.  Today political economics finally trump basic finance.  It is the correct method to use in the context we find ourselves in.  Other methods are not fertile because they no longer explain things like they used to.  In retrospect, that ZH has gone down this path was both inevitable and unfortunate.  We must get through this.

overmedicatedundersexed's picture

stop using "Communist" you are so Orwellian.

what color should we describe the sky, o Master of the language.

can't we all just get along?

kote's picture

Seconded.  I do actually think it's been improving again lately though.

theworldisnotenough's picture

1. I would love to assign a value to Fannie and Freddie's assets. What formula would you use? This not at all communist administration has made that nigh impossible. 

Instant Karma's picture

Need some help here. If we go broke, does that create deflation (whereby my dollars are more valuable) or inflation (whereby my dollars are less valuable).

Right now I'm building a position in physical precious metals, but have lots of cash set aside too. Of course the dollar would fall if most other developed countries weren't more or less train wrecks too. But since they are, the dollar remains steady vs other currencies (although down big over the last decade). What to do?

Crummy's picture

It would be the equivalent of holding a phone bill as collateral when the phone has already been turned off and the phone company went out of business.

Neophiliac's picture

I take it you are new to this game. If so, you came to the wrong site. This is a good place if you can filter through the garbage of manufactured horrors because the investigative capacity and factual information here is (was?) actually quite good. Editorial content is uneven at best.

As for your question: if U.S. defaults, dollar will no doubt devalue and we will have inflation or hyperinflation. But seeking solace and safety in gold and cash is an illusion. For a default to happen, we'd need a complete breakdown of political order to occur. We are very far away from a well functioning government, to be sure, but we do not live in Zimbabwe, as those who have actually been to Zimbabwe would attest. If you do start seeing violent protests in the street and the government generally loosing their marbles - then start worrying. And in that case, my suggestion is to get some reasonably portable weaponry and ammo, a lot of canned food and heirloom seeds, some tools and and RV - and stake out some ground somewhere out west, preferably where there is a lot of clean mountain water and very few people around. With good survival skills, you should be pretty safe.

WaterWings's picture

We already have a breakdown in political order. Precious metals should always be part of a reasonable survival portfolio.

Why you knockin' ZH?

This is a good place if you can filter through the garbage of manufactured horrors because the investigative capacity and factual information here is (was?) actually quite good.

What you say is a little uneven. Please clarify.

WaterWings's picture

For someone residing inside the US that is no longer willing to risk their savings in the collapsing, corrupt, and opaque markets I would:

1) not purchase real estate unless it is rural, has decent soil, and easy access to water.

2) purchase items that preserve life (food, tools for defense and farming)

3) continue purchasing precious metals

4) maintain emergency cash only: ~$1,000

At this point, marginal losses in precious metals are irrelevant - this system has already collapsed, but most are still in denial.

Gordon_Gekko's picture

Yeah, we TOTALLY believe what the deptt. of Bullshit Economic Analysis reports. It's like a student grading his own exam paper.