GDP Up on Growth in Personal Consumption - But Disappoints

January 28th, 2011
in GDP, econ_news

shopper Econintersect:  Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.2% in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the BEA (Bureau of Economic Analysis).  In the third quarter, real GDP increased 2.6%.

Follow up:

Although the advance estimate of 4Q GDP growth is larger than the growth in the third quarter, the increase is less than anticipated. estimated 3.8% and reported a survey with a 3.7% concensus.  However, The Wall Street Journal survey of econonmists reached a concensus of 3.3% for 4Q.  Analyst Steven Hansen has suggested later estimates (next due Februsry 25) could be higher than the advanced 3.2% estimate announced today.  Maybe the WSJ concensus ultimately will prove too low and the final GDP growth could be closer to the numbers.

The strongest component of the current BEA report is consumer spending which grew at a rate of 3.04%.  Actually net exports grew more (+3.44%) but that was driven by a drop in imports and correlates closely to a drop in private inventories (-3.70%).  Other components of GDP were essentially self-canceling and most of the 4Q growth came, in net, from personal consumption.

Former Dallas Fed President, Robert McTeer, is quite optimistic about his inference from the 4Q number.  McTeer said:

Real financial sales were up 7.1 percent. Maybe this is the beginning of something good. 

McTeer did not comment on the (probably one-time) reduction in imports and how that might have impacted the 7.1% sales growth he cited.

Sources:  GEI Analysis,, Bob McTeer blog,, The Wall Street Journal and 

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