Keeping you up to date on the latest data releases.
Real GDP rose at an annualized rate of 3.2 percent in the fourth quarter, according to the advance estimate released by the Bureau of Economic Analysis (BEA), coming in below the median estimate from the Bloomberg survey of 3.5 percent growth. For 2010:Q4, real GDP grew 2.8 percent. The increase in output during the fourth quarter was primarily driven by gains in consumption, net exports, and business fixed investment, which were partially offset by a slowing in inventory accumulation (contributing negatively to growth). Real personal consumption expenditures rose 4.4 percent in the fourth quarter, contributing 3.0 percentage points to real GDP growth (its strongest quarter since 2006:Q1) and pulling its 4-quarter growth rate up from 1.8 percent to 2.7 percent. The fourth quarter gain came as growth in consumer durables spiked up to 21.6 percent, its highest quarterly gain since 2001:Q4. Durables growth accelerated across most major categories, but were particularly strong in autos, posting a 45.1 percent increase in the fourth quarter. Business fixed investment rose 5.8 percent in the fourth quarter, compared to a 10.0 percent gain in the third quarter. Equipment and software investment increased 5.8 percent, following four consecutive quarters of double-digit growth. Interestingly, the BEA estimated that structures investment eked out a 0.9 percent gain in the fourth quarter, following 9 quarters of declines. This isn’t the first time the BEA has expected structures to turn the corner. Their first estimate for the third quarter had structures increasing by 3.8 percent, and that was revised down to −3.6 percent. On the residential side, fixed investment increased 3.4 percent in the fourth quarter, compared to a −27.3 percent decline in the third. Private inventory accumulation slowed from $121.4 billion in the third quarter to $7.2 billion in the fourth quarter, subtracting 3.7 percentage points from output growth. As a result, final sales—GDP less inventories—jumped up 7.1 percent in the fourth quarter, compared to a paltry 0.9 percent in the third quarter. Net exports contributed 3.4 percentage points to real GDP growth in the fourth quarter, as exports increased 8.5 percent and imports fell 13.6 percent. On a year-over-year basis, exports are up 8.9 percent, while imports are up 10.6 percent (despite its fourth quarter decline. An alternative snapshot of actual demand stemming from in the U.S.—final sales to domestic purchasers (which excludes inventories and net exports)—rose 3.4 percent in the fourth quarter, and is trending at 2.9 percent over the past four quarters.