Earlier today we summarized the Q4 GDP print and said it would be virtually impossible for the economy to carry over a comparable annualized growth rate into 2014. Moments ago Goldman agreed, when it cut its Q1 GDP forecast by 30 bps to 2.7%.
From Jan Hatzius:
BOTTOM LINE: Q4 GDP grew in line with expectations, although the composition was slightly softer than expected. We start our Q1 GDP tracking estimate three-tenths below our prior assumption at 2.7%.
MAIN POINTS:
Real GDP increased at a 3.2% rate in Q4 (vs. consensus 3.2%). Personal consumption expenditures rose a smaller-than-expected 3.3% (vs. consensus 3.7%), which was still the fastest rate since 2010. Business fixed investment rose 3.8%, held down by a 1.2% decline in structures investment following two quarters of strong gains. Equipment investment rose a solid 6.9%. Business inventories added four-tenths to headline growth. Residential investment declined 9.8%, reflecting in part the lagged impact of weaker housing starts in past quarters. Net exports were also a strong positive contributor, adding 1.3 percentage points to growth. Federal government spending fell 12.6%, pushing total government spending down 4.9%. The Commerce Department estimated that the federal government shutdown subtracted three-tenths from GDP growth. Although the composition of this morning's report was slightly softer than expected, solid 2.9% growth in real final sales to private domestic purchasers suggests positive underlying momentum heading into 2014.
We start our Q1 GDP tracking estimate three-tenths below our prior assumption at 2.7%, due to the larger-than-expected inventory contribution in Q4.