Keeping you up to date on the latest data releases.
Real GDP in the fourth quarter of 2010 was revised down from an annualized gain of 3.2 percent to 2.8 percent, surprising expectations of a slight upward revision. Despite the 0.4 percentage point knock-down, the level of GDP (as of the fourth quarter) is still slightly above its pre-recession (2007:Q4) level. The downward adjustment to fourth quarter growth primarily reflected an upward revision to imports (which enter in as a subtraction in GDP accounting), a somewhat sharp downward revision to state and local government expenditures, and a downward adjustment to personal consumption expenditures. Real imports fell 12.4 percent in the fourth quarter, revised up from a 13.6 percent decline, which subtracted 0.2 percentage point from real GDP growth. On the other hand, exports were revised up from 8.5 percent to 9.6 percent in the second estimate, adding a little over 0.1 percentage point to growth. State and local government expenditures were revised down from a 0.9 percent decrease to a 2.4 percent decrease (now matching its decline in the fourth quarter of 2008) in the fourth quarter. Personal consumption expenditures in the fourth quarter were knocked down by 0.3 percentage point to 4.1 percent during the revision, thought that is still its strongest quarterly growth since the fourth quarter of 2006. Interestingly, business fixed investment was revised up in the fourth quarter from 4.4 percent to 5.3 percent, largely on an upward boost to structures investment (from 0.9 percent to 4.5 percent). An alternative snapshot of actual demand stemming from in the U.S.—final sales to domestic purchasers (which excludes inventories and net exports)—was knocked down slightly due to revisions, edging down from 3.4 percent to 3.1 percent in the fourth quarter, though that is still slightly above its long-term (25 year) average of 2.7 percent.