4Q2010 GDP Revised Back Up

The third release of 4Q2010 Gross Domestic Product (GDP) for the USA was upwardly revised:

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 3.1 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the “third” estimate released by the Bureau of Economic Analysis (BEA). In the third quarter, real GDP increased 2.6 percent.

The advanced number was 3.2% (analysis here) , the second release was 2.8% (analysis here) – and now the final release is 3.1%.  These numbers are based on more complete source data.

The reasons for the upward revision from the BEA:

The upturn in real GDP primarily reflected upturns in exports, in nonresidential fixed investment, in PCE, and in private inventory investment and a smaller decrease in residential fixed investment that were partly offset by an upturn in imports.

Econintersect has prepared a table of the contributions to GDP across the various releases.  This table 1.1.2 from the NIPA tables.  A word of caution – this is a comparative contribution table based on the previous quarter.  Items such as imports are a deduction from GDP – but when the deduction is less bad, it becomes a positive contributor to the relative change in GDP.

Comparing the advance to 3rd release:

  • personal consumption expenditures contracted but compared to previous quarters was a significant increase in contribution;
  • private domestic investment contracted – and is at a terrible levels compared to previous quarters.
  • the export / import was less good – but is good compared to previous quarters showing the strength in exports.  Remember this is a comparable less bad percentage – and the USA imports significantly more then it exports.

Speculating going forward to 1Q2011 GDP, the trade balance is growing, personal expenditure appears flat, and government expenditure overall has a slight negative trend.  There is anecdotal data that investment is down.  All would contribute to a lower 1Q2011 number in the range of 2.0% to 2.5% – but in the wacky world of GDP calculations, anything is possible.

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