US Real GDP growth at 3.1%; Quarterly inflation at 0.4%
It turns out that the economy at the end of 2010 was about as strong as most had expected all along. Fourth quarter GDP growth was bumped back up to 3.1% annualized growth from the second estimate of 2.8%. The latest estimate came in slightly higher than the consensus forecast for 3.0%. As with the prior estimate, the fourth quarter was still stronger than the third quarter pace of 2.6%.
The upward revision to fourth quarter growth primarily reflected stronger inventory investment, nonresidential structures, equipment & software, and residential investment. Downward revisions were seen in net exports and government purchases.
The GDP price index was unrevised compared to the second estimate of 0.4%. Analysts had expected 0.4%.
The latest estimates for GDP and components indicate that the economy had moderately strong forward momentum at the end of 2010. More recent monthly numbers show overall momentum continuing but very mixed by sector with manufacturing, export, and consumer sectors leading growth and with housing, commercial real estate, and state & local government sectors weighing on growth. Via BEA:
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. In the third quarter, real GDP increased 2.6 percent.
The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.8 percent (see "Revisions" on page 3).
The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
The fourth-quarter acceleration in real GDP primarily reflected a sharp downturn in imports, an acceleration in PCE, an upturn in residential fixed investment, and an acceleration in exports that were partly offset by downturns in private inventory investment, in federal government spending, and in state and local government spending, and a deceleration in nonresidential fixed investment.
Final sales of computers added 0.35 percentage point to the fourth-quarter change in real GDP after adding 0.29 percentage point to the third-quarter change. Motor vehicle output subtracted 0.27 percentage point from the fourth-quarter change in real GDP after adding 0.49 percentage point to the third-quarter change.