Accelerating recovery or a winter head fake? Who knows, but the advance estimate for Q4 real GDP growth was 2.8 per cent after third quarter growth of 1.7 per cent. Consensus expectations were for 3 per cent growth:
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 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.
Real GDP growth for all of 2011 was therefore 1.7 per cent.
The advance estimate is always subject to later, often quite dramatic, revisions (in either direction). But at first glance it seems like a mixed report. Much of the growth came from higher inventory, while sales were surprisingly low. Durable goods climbed impressively.
The price index for gross domestic purchases rose by a weak 0.8 per cent last quarter, which may contribute to renewed calls for further Fed easing even after yesterday’s dovish signaling on rates.
We’ll also note the fiscal drag at both the state and federal level, though the downturn in federal consumption expenditures was the result of a big decline in defence sector spending; nondefence spending climbed. The headline number would have been much more impressive without the government pullback.
As usual we’ll crack open the report and examine the blood and guts during US Markets Live later today, but for now here’s the main text below.
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From the report
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.
Final sales of computers added 0.18 percentage point to the fourth-quarter change in real GDP after adding 0.22 percentage point to the third-quarter change. Motor vehicle output added 0.30 percentage point to the fourth-quarter change in real GDP after adding 0.12 percentage point to the third-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.8 percent in the fourth quarter, compared with an increase of 2.0 percent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 1.0 percent in the fourth quarter, compared with an increase of 1.8 percent in the third.
Real personal consumption expenditures increased 2.0 percent in the fourth quarter, compared with an increase of 1.7 percent in the third. Durable goods increased 14.8 percent, compared with an increase of 5.7 percent. Nondurable goods increased 1.7 percent, in contrast to a decrease of 0.5 percent. Services increased 0.2 percent, compared with an increase of 1.9 percent.
Real nonresidential fixed investment increased 1.7 percent in the fourth quarter, compared with an increase of 15.7 percent in the third. Nonresidential structures decreased 7.2 percent, in contrast to an increase of 14.4 percent. Equipment and software increased 5.2 percent, compared with an increase of 16.2 percent.
Real residential fixed investment increased 10.9 percent, compared with an increase of 1.3 percent. Real exports of goods and services increased 4.7 percent in the fourth quarter, the same increase as in the third.
Real imports of goods and services increased 4.4 percent in the fourth quarter, compared with an increase of 1.2 percent in the third.
Real federal government consumption expenditures and gross investment decreased 7.3 percent in the fourth quarter, in contrast to an increase of 2.1 percent in the third. National defense decreased 12.5 percent, in contrast to an increase of 5.0 percent. Nondefense increased 4.2 percent, in contrast to a decrease of 3.8 percent. Real state and local government consumption expenditures and gross investment decreased 2.6 percent, compared with a decrease of 1.6 percent.
The change in real private inventories added 1.94 percentage points to the fourth-quarter change in real GDP after subtracting 1.35 percentage points from the third quarter change. Private businesses increased inventories $56.0 billion in the fourth quarter, following a decrease of $2.0 billion in the third quarter and an increase of $39.1 billion in the second.
Real final sales of domestic product — GDP less change in private inventories — increased 0.8 percent in the fourth quarter, compared with an increase of 3.2 percent in the third.