Highlights The fourth quarter ended up not quite as sluggish as believed last month but growth clearly had softened from the third quarter. Real GDP growth for the fourth quarter was revised up slightly to an annualized 2.6 percent from the second estimate of 2.4 percent and compared to the third quarter's 4.1 percent. Expectations were for 2.7 percent. The third estimate still was significantly lower than the advance estimate of 3.2 percent.
Final sales of domestic product were revised up to 2.7 percent from 2.3 percent for the second estimate and versus 2.5 percent in the third quarter. Final sales to domestic purchases were bumped up to 1.6 percent from the prior estimate of 1.2 percent and compared to 2.3 percent the prior quarter.
By components, upward revisions were seen in PCEs, business equipment, residential investment, inventory investment, and government purchases. Downward revisions were posted for nonresidential structures and intellectual property. Net exports were unrevised overall.
Looking at the components by growth rates instead of direction of revision, the fourth quarter continued to be led by personal consumption, business equipment, and exports. Tugging down on growth were government purchases, residential investment, and nonresidential investment.
The overall price index was unrevised at 1.6 percent annualized. Third quarter growth was 2.0 percent. Core chain prices also were unrevised at 1.9 percent and equaling the third quarter pace.
The picture of the fourth quarter is little changed-it was a soft patch and one that likely will be followed by another in the first quarter.
Market Consensus before announcement GDP growth for the fourth quarter was revised down sharply to an annualized 2.4 percent from the advance estimate of 3.2 percent and compared to the third quarter's 4.1 percent. Final sales of domestic product were revised down to 2.3 percent from the advance estimate of 2.8 percent and compared to third quarter's 2.5 percent. Final sales to domestic purchasers were revised down to 1.2 percent from the advance estimate of 1.4 percent and compared to third quarter's 2.3 percent. By components, downward revisions were seen in PCEs, inventory investment, net exports, and government purchases. Nonresidential fixed investment was revised up. The overall price index was bumped up to 1.6 percent from 1.3 percent. Third quarter growth was 2.0 percent.
Definition Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Why Investors Care
Real GDP growth is always quoted at a quarterly annual rate. It measures how much the economy has grown over a three-month period. Quarterly growth rates are often volatile; consequently, economists also like to look at the year-over-year growth in GDP. The yearly changes tend to be more stable. Data Source: Haver Analytics
It is common to compare quarterly changes at annual rates in the GDP deflator. These can be volatile, just like the quarterly swings in real GDP growth; as a result, the trend in inflation is better determined by year- over- year changes. Data Source: Haver Analytics
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