Q4 Final GDP Revision 3.1%, Up From 2.8% Previous, In Line With Expectations; Change In Inventories Key Driver

Tyler Durden's picture

Today's final Q4 GDP revision indicated a 3.1% annualized rate of pick up in the economy, modestly higher from the previous print of 2.8% and in line with expectations of a 3.0% reading. Of course, it being almost April 2011, this number is by now completely irrelevant. Nonetheless, here are the components that contributed to the difference: "The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased." As the chart below shows, once again Inventories was the swing factor, which detracted 3.42% from Q4 GDP as opposed to 3.7% in the prior two GDP estimates. As Q1 2011 GDP data starts coming out, we are confident inventories will once again be a contributor to GDP "growth" as this most hollow indicator of economic improvement needs to pick up the slack for declining PCE and trade balance contributions.

Comparison of 1st through Final Q4 GDP revisions:

Full report link.

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firstdivision's picture

So QE3 tis but a wetdream of the Bernak, HF's, and PD's then at this point.  Don't know how they will jam the print button at this rate.

HelluvaEngineer's picture

It's easy.  They'll just do it.

Btw, I think that button is actually labeled "Easy".

firstdivision's picture

That is true HE.  I should have said, I do not know how they will justify hitting the print button now. 

Slash's picture

How does personal consumptin increase while imports decrease? People just buying services instead of ipads?

Spalding_Smailes's picture

You could see this coming 10 miles away ..... Lol'


WASHINGTON, D.C. – March 24, 2011 – The Association of American Railroads (AAR) today reported rail traffic gains for the week ending March 19, 2011, with U.S. railroads originating 293,772 carloads, up 2.3 percent compared with the same week last year. Intermodal volume for the week was also up, totaling 222,788 trailers and containers, up 10.7 percent compared with the same week in 2010. For the first 11 weeks of 2011, U.S. railroads reported cumulative volume of 3,168,141 carloads, up 5.3 percent from last year, and 2,398,885 trailers and containers, up 8.1 percent from the same point in 2010.

Combined North American rail volume for the first 11 weeks of 2011 on 13 reporting U.S., Canadian and Mexican railroads totaled 4,103,782 carloads, up 4.1 percent compared with the same point last year, and 2,972,689 trailers and containers, up 7.2 percent compared with last year.


Johnny Lawrence's picture

Nice.  Railroad statistics.  That's it.  Recession is over.

TruthInSunshine's picture

Rail freight statistics set against two of the historically worst years (and quarters) ever, and this after unprecedented levels of Berbankincidal/NerObama/Geithner Hopium-U812 were injected into the system from any and every angle.

Pathetic statistics. Might as well just build ghost cities like they are doing in China, and open additional GM dealerships to channel stuff cars unto.

Or, if it's really good (and organic), as you insinuate, Smailes, let's just agree to yank anymore QE, and you can explain to me why the markets get cratered in real time as I remind you how great the economy is - according to you.

Oh regional Indian's picture

Berbankincidal/NerObama/Geithner Hopium-U812

Radioactive hilarity ensues!


youngman's picture

As the price of Diesel goes up....rail shipments should go up....less expensive than a truck..

Spalding_Smailes's picture

The trend started way before the spike in fuel .... So your seeing an uptick of 22% since 2009. Sustained Progress.

WASHINGTON, D.C. – Jan. 11, 2011 – The Association of American Railroads (AAR) today reported that 2010 saw annual total carload traffic on U.S. railroads increase 7.3 percent with 14.8 million total carloads, compared with 13.8 million carloads in 2009. Total annual intermodal traffic in 2010 increased 14.2 percent with 11.3 million total truck trailers and shipping containers, compared with 9.9 million trailers and containers in 2009.



Also the freight transportation index has been trending up ....

The revised Freight TSI rose 14.6 percent over the last 21 months, starting in May 2009, after declining 16.8 percent in the previous 16 months beginning in January 2008. The index has increased in 16 of the last 21 months (Table 2). In January 2011, the freight index returned to 108.1, the same level as in August 2008 when the index was early in the decline.



ARW's picture

The 2011 trend is not promising. 08, 09 and 10 all had NSA carload increases from January to February. '11 has had a decrease. The March figures may will trend below those of '10 and '09. The bad February was of course blamed on snow. However, it appears March is continuing the downward trend.

poor fella's picture

I'm around two sets of tracks most days.. and am seeing more military medical & combat hummers and transports, lots and lots of lumber, and scrap metal. Those must all be going to port. Are there stats on what goes in which direction? I'll admit, I also see quite a few double-stacked Chinese containers, crimony, SprawlMart is still in business, but at the same time, there's plenty of looong trains of empty lumber cars, cattle cars, and containers (they leave the door open so nobody bothers).

IMO - Rail is so much more efficient, this change has been a long term theme, uptick or not.

Spalding_Smailes's picture

From the same article.

Twelve of the 20 carload commodity groups posted increases from the comparable week in 2010. Those groups posting significant increases included: metallic ores, up 93.5 percent; petroleum products, up 12.9 percent; motor vehicles and equipment, up 12.2 percent, and pulp, paper and allied products, up 11.2 percent. The commodity groups reporting a notable drop in weekly traffic were waste and nonferrous scrap, down 14 percent and primary forest products, down 10.1 percent.

Also ....

Arlington, Va. – The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 2.9% in February after increasing a revised 3.5% in January 2011. The latest drop put the SA index at 113.3 (2000=100) in February. In January, the SA index equaled 116.6. During December 2010 and January 2011, the SA tonnage index jumped a total of 6.1%.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 102 in February, down 2.8% from the previous month.

Compared with February 2010, tonnage climbed 4.2%, although this was smaller than January’s 7.6% year-over-year increase. Through the first two months of the year, tonnage is up 5.9% compared with the same two months last year.

Trucking serves as a barometer of the U.S. economy, representing 68% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 8.8 billion tons of freight in 2009. Motor carriers collected $544.4 billion, or 81.9% of total revenue earned by all transport modes.



Oh regional Indian's picture

Inventories reflecting so prominently in GDP upward revision is as asinine as the birth/death model in Job-Less-Ness statistics.

NUMBer games, the dice is loaded in favour of the NUMBer generators.

Talk about mark-it to model fallacies.



firstdivision's picture

True, but this time their numbers game is working against them.  This is just affirming that not only does QE3 not even need to be thought about, but that QE2 might have to end earlier than planned.  So now the PD's will have to think about how to keep the free money flowing by plunging the markets again.

Oh regional Indian's picture

Interesting firstD.

You mean plunge like 08? I don't think the global scenario can handle it. What other choices?


firstdivision's picture

Not quite like 08, but pull the markets back about 10% and Congress will be applauding Ben as he licks his finger, then hits the print and ship to PD's button.  IMO I think that is the only option in that the Fed has to either at this rate end any thoughts on QE(as they will now get more hell from R. Paul as to justify continuing QE2), and think about raising rates.  Either of these options will cause turmoil in the markets. 

Ivanovich's picture

Perhaps, but take the markets down 10% or so won't do jack to curb inflation.

firstdivision's picture

Correct on that, but it will keep the cheap funds to PD's and that is all that matters now.  Quite being anti-American by talking about stuff that affects the little people.

Oh regional Indian's picture

Ivan, in this distorted world, inflation is more about perception management (see smaller food quantities for same price as an example), unfortunately. it has not bitten hard enough, yet, to make the sheeple say much more than Baa!


overmedicatedundersexed's picture

shipping food and coal over seas is up..but our imports are DOWN?? something about the GDP smells..did they get the BLS to do this??

Sudden Debt's picture

Companies now still make a profit because:

- The cheap stuff is still being sold.

Companies will bleed and have massive liquidity problems because:

- New stocks for future sales are way more expensive.


To counter it:

- Prices will increase overall 15% to keep track on stocks.

- Invoice payment time has rissen to 67 days in Europe.

- Credit is in very very short supply, so credit is demanded from the suppliers.

Ray1968's picture

I just bought some more Silver Eagles... so I expect that silver will plunge again today. I am the anti-indicator of market direction.

tarsubil's picture

Oh lordy lordy lordy,

I tell ya,

I know what to do but not when to do it,

when I buy coins, they drop

when I hold paper, they rise

Oh lordy lordy lordy,

Got the silver peak buyin' blues...

razorthin's picture

Oh yeah?  How would it look deflated for actual inflation???

A Man without Qualities's picture

The main reason imports fell is because oil prices rose on the quarter.  It may sound odd, but they use a weighted average import price, but then adjust it by the price deflator, which is the change in price over the quarter.  Seems like statistical nonsense to me, but it's interesting they use different price deflators for different components, and they all seem to skew towards a higher overall GDP.

dcb's picture

you think the gdp report was leaked based on the huge es contract after hours last night?

SheepDog-One's picture

Not translating into much upside yet.

michigan independant's picture

Share inflation: Not monetary draining productive capital 


The Barakzai dynasty that has ruled Afghanistan since 1826 ends October 17 as King Amanullah, now 37, abdicates and flees west in a Rolls Royce along with 17 of his followers after a 10-year reign in which he has drawn up the country's first written constitution but failed to modernize Afghanistan's tribal society, although he has tried to model a secular government along the lines of Turkey's, abolished slavery, attacked corruption, created a government budget, and reorganized taxes. Mohammad Nadir Khan and his brothers take over the government and Nadir Khan is elected shah by a tribal assembly; he begins a bloody persecution of the opposition and will reign until his assassination in 1933.

Elsewhere in the Middle East, Iraq took a big step toward gaining independence from the British. The Iraqi government had, since the end of World War I and the beginning of the British Mandate in the Middle East, constantly resisted British efforts to control or restrict them. In September, Britain announced that it would support Iraq's inclusion in the League of Nations, this signaled the beginning of the end of their direct control of the region.

Kellogg-Briand Pact (also called the Pact of Paris), signed 27 August 1928 by 15 nations, reflected the movement to outlaw war to prevent a recurrence of the carnage of World War I. French foreign minister Aristide Briand initially proposed a bilateral treaty renouncing war as a method of settling disputes between France and the United States and drawing the United States into its defensive system against Germany. U.S. support for the pact came from both ends of the political spectrum. Interventionists thought it would lead to U.S. acceptance of the League of Nations; isolationists and peace groups hoped it would end war. Charles Lindbergh's successful solo crossing of the Atlantic and subsequent landing in Paris in May 1927 also helped boost Briand's efforts. Secretary of State Frank Kellogg, fearful that signing the treaty could drag the United States into a European war on the side of France, expanded the proposed agreement to a multilateral treaty renouncing war. Briand had no choice but to accept the pact, which was moral in tone but lacked force and did not bind America to any European treaty system. Subsequently, when Japan seized Manchuria in 1931, when Italy took over Ethiopia in 1935, and later when Germany began its expansion in the late 1930s, the Pact was exposed as the toothless treaty it had been all along.

Goldman Sachs partner Sydney Weinberg was asked why his company had formed so many closed-end funds so rapidly in 1929. His reply was: “Well, the people want them”

Rinse and repeat. Follow the footprints to today even in a brief context. Volume same, cost up for your pretty charts. Same results Kids.

John Law Lives's picture

How is this headline for bitter comedy:


03-25 09:17: Fed's Lockhart says one reason not worried about inflation is that wage growth has been weak


Wages and house prices and iPod prices are depressed.  Everything else that is important to sustaining life (food, energy, health care, tuition) is soaring.

No inflation here.  Keep printing...

FUBAR Ponzi scam.

firstdivision's picture

Holy crap!!! Lockhart comes off like a giant douche with this.  That is now the dumbest thing I've heard all month, even exceeding Duh-Duh-Duh-Dudley's iPad statement.

Rogerwilco's picture

He is right, there can be no '70s style inflationary spiral because unemployment is too high to allow general wage increases. Companies pay overtime rather than hire new workers or give anything but token raises.

A cynical person might see the situation as social conditioning, a prelude for widespread serfdom. But not me, no sir, it's blue skies for me.

TruthInSunshine's picture

Larry Meyers wrote an op-ed in today's New York Times as to why inflation is not an issue, also.

And then, of course, Bernanke announced he will hold press conferences to address issues.

What I see is a full court press by The Federal Reserve, to try and retake the initiative in the debate on inflation, and it will fail miserably. Regardless of what they say, every time they talk about it, or respond to questions about it, it only reinforces the notion that they're a cause or could be a cause of it.

Of course, anyone who has done serious research, as John Lohman has done with his 'billion price point' analysis, can prove inflation is close to 9% now, but the Fed keeps pounding the table on the flawed CPI.

At any rate, the Federal Reserve is obviously worried now and they're looking for ways to deflect or turn the debate. That tells me they've already lost the battle.

SheepDog-One's picture

Everythings coming up roses, recession over, total justification to keep QE3 estimates growing in order to keep stocks rising dont even suggest QE life support stops or interest rate rise above 0%. Just sit and take it, are you not entertained?

JoeSexPack's picture

Rising prices & expanded money supply added to GDP, as usual.

They should deduct the official inflation rate from the official GDP growth rate to get a net growth rate, but I've never seen it reported that way in the MSM.

Advertisers don't like it.

The .gov measures inflation & calls it growth.