Q4 GDP Grow More Than Expected In Final Revision; Finance Was Biggest Contributor To Q4 Real GDP-

Q4 GDP Grow More Than Expected In Final Revision; Finance Was Biggest Contributor To Q4 Real GDP-

While it’s very much meaningless by now, with the US economy almost in the 2nd quarter, the 3rd and final Q4 GDP estimate was published moments ago by the BEA and it came in at 4.3%, higher than the 4.1% expected, and higher than the 2nd estimate of 4.1%.

Some more details:

  • Personal consumption rose 2.3% in 4Q after rising 41% prior quarter; this number was below the consensus exp of 2.4% and down by 0.1% from the 2nd estimate.
  • The GDP price index rose 2% in 4Q after rising 3.5% prior quarter; this also missed consensus of 2.1%.
  • Core PCE q/q also missed estimates, rising by 1.3% in the final revision, missing the 1.4% estimate.

In the final GDP revision, the number primarily primarily reflected an upward revision to inventory investment that was partly offset by a downward revision to business investment.

A quick look at final GDP component shows the following:

  • Personal consumption contributed 1.58% of the final number, down from the 1.61% second estimate
  • Fixed Investment was 3.04% of the 4.32% GDP print, down from 3.12% in the previous estimate
  • Change in Private Inventories jumped, from the 1.11% estimate in February to 1.37% currently
  • Net Exports was virtually unchanged at -1.53%, vs -1.55% previously
  • Finally, Government detracted 0.14% from the GDP print, vs -0.19% in the second estimate

Profits decreased 1.4% Q/Q after increasing 27.4% in the third quarter. Corporate profits decreased 0.7% in the fourth quarter from one year ago.

Profits of domestic nonfinancial corporations decreased 3.4% after increasing 44.3%. Profits of domestic financial corporations increased 3.7 percent after increasing 2.6 percent. Profits from the rest of the world decreased 0.2%after increasing 13.4%.

Today’s release also includes estimates of GDP by industry, or value added—a measure of an industry’s contribution to GDP. Private goods-producing industries increased 6.1%, private services producing industries increased 4.9 percent, and government decreased 1.1 percent. Overall, 17 of 22 industry groups contributed to the fourth-quarter increase in real GDP.

  • The increase in private goods-producing industries reflected increases in construction as well as durable goods manufacturing (led by computer and electronic products as well as fabricated metal products).
  • The increase in private services-producing industries reflected increases in finance and insurance (led by Federal Reserve banks, credit intermediation, and related activities); health care and social assistance (led by ambulatory health care services); administrative and waste management services (led by administrative and support services); and professional, scientific and technical services.  These increases were partly offset by decreases in accommodation and food services (led by food services and drinking places); utilities; and educational services.
  • The decrease in government reflected decreases in state and local as well as federal.

Tyler Durden
Thu, 03/25/2021 – 08:44

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