Following last quarter's upward revised 5.0% GDP, driven higher mostly as a result of even more mandatory Obamacare taxation, Q4 GDP had nowhere else to go but down, the only question was how much. Wall Street estimated 3.0%. Moments ago we got the first estimate for Q4 GDP and it was a miss, printing at 2.6%, and nearly 50% below the Q3 annualized number. This also means that the final 2014 GDP is 2.4%, higher than the 2.2% in 2013 as well as the 2.3% in 2012.
And while the overall report was disappointing, with GDP dragged down mostly by Imports which contributed to -1.39% of GDP, which in turn is driven by lower crude prices. Remember when plunging crude was unambiguously good? Well, not for GDP. And what's worse, the impact on Fixed Investment, which contributed 0.37% to GDP in Q4, down from 1.18% in Q2, is yet to be felt as energy company after company cuts its Capex spending.
- The good news: Personal Consumption spending contributed 2.87% of the GDP number or more than the total print, growing 4.3% Q/Q, above the 4.0% expected. This was the highest annualized quarterly consumption since Q1 2006.
- The bad news: much of the consumption that economists had expected would take place in Q1 was pulled forward, and a result Q1 GDP will now be revised even lower.
The full GDP breakdown: