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.