Q4 GDP Revised Lower To 2.5% Despite Stronger Spending

In what may be the most unremarkable GDP revision in years, moments ago the BEA revised its initial Q4 2017 GDP estimate from 2.6% to 2.5%, lowering the number by fractions of a basis point, to 2.530% specifically, and in line with estimates.

According to the Dept of Commerce, the downward revision reflected a downward revision to consumer spending on goods, and a small downward revision to inventory investment. These downward revisions were partly offset by upward revisions to consumer spending on services and to housing investment.

The revision lower took place even though personal consumption, measured by PCE, rose at a 3.8% annualized rate, higher than the 3.6% estimate, and unchanged from last quarter despite reports that showed a sharp drop in retail sales to close the year. Core PCE was also in line with both expectations and the initial estimate at 1.9%.

Nonresidential fixed investment, or spending on equipment, structures and intellectual property rose 6.6% in 4Q after rising 4.7% prior quarter, if also barely changed from the initial estimate. .

Other revisions were similarly de minimis, with private inventories barely moving (from -0.67% to -0.70%), Net Trade also stayed the same as in the initial estimate, the same as government consumption.

The changes, or lack thereof, are shown in the chart below.

Overall, there were virtually no changes to talk about, and with the data clearly well in the rearview mirror, the question the market is focused on is what will Q1 GDP be when it is reported in 2 months time.