Courtesy of Doug Short.
The Advance Estimate for Q4 GDP came in at 2.8%, which is an improvement over the 1.8% Third Estimate for Q3 GDP, but below the general consensus. (Note: GDP for Q3 was initially put at 2.5%, with subsequent downward revisions to 2.0% and finally 1.8%).
Here is an excerpt from the Bureau of Economic Analysis news release:
The increase in real GDP in the fourth quarter reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, residential fixed investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending. [Full Release]
The Briefing.com consensus was for 3.2%. The 54 economists who responded to the January Wall Street Journal survey forecast 3.1% (average) 3.2% (median), with the single most frequent estimate (mode) of 3.5%
Here is a look at GDP since Q2 1947 together with the real (inflation-adjusted) S&P Composite. The start date is when the BEA began reporting GDP on a quarterly basis. Prior to 1947, GDP was reported annually. To be more precise, what the lower half of the chart shows is the percent change from the preceding period in Real (inflation-adjusted) Gross Domestic Product. I’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER).
Here is a close-up of GDP alone with a line to illustrate the 3.3 average (arithmetic mean) for the quarterly series since the 1947. I’ve also plotted the 10-year moving average, currently at 1.7. The Advance Estimate for Q4 GDP puts us a bit above halfway between the two.
Here is the same chart with a linear regression that illustrates the gradual decline in GDP over this timeframe. The latest GDP number has moved above the approximate 2.1 of the regression at the same position on the horizontal axis.
And for a bit of political trivia in this post-election period, here is a look a GDP by party in control of the White House and Congress.
In summary, the Q4 GDP Advance Estimate of 2.8 came in below expectations, but it is a welcome improvement over the Final Estimate for Q3. Now let’s hope it doesn’t follow the same path of downward revisions as its Q3 cousin.
