Revised Q4 GDP: +0.1%


The Commerce Department this morning released its “second” estimate of 4th Quarter GDP. The revised figures show that GDP didn’t contract in the Quarter, as originally estimated, but rather grew by a weak 0.1%. Even the new positive number shows a dramatic deceleration from the 3rd Quarter, when GDP was growing at a 3.1%.

Much of the GDP growth was driven by personal consumption, which rose 2.1% in the Quarter. However, that number was revised down from the initial estimate of 2.2%. Both numbers missed expectations, with economists estimating personal consumption would increase 2.3% in the Quarter.

Consumer spending accounts for about 2/3 of the economy. The weakness of consumer spending in the Quarter suggests a continuing slowdown. The price index for goods rose 1.5%, more than originally estimated and more than the 3rd Quarter. If this trend continues, it will act as a further drag on consumer spending.

Real purchases — spending on products and services produced both in the US and overseas fell by 0.1% in the Quarter. This is a sharp drop from the 2.6% increase measured in the 3rd.



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