Final Q4 GDP Shows 2.1% Growth

WASHINGTON - Fourth quarter gross domestic product growth was revised up to a 2.1% annual rate in the third estimate from the 1.9% rise in the advance and second estimates due to stronger PCE and private inventories growth, data released Thursday by the Bureau of Economic Analysis showed.

PCE growth was revised up to a 3.5% annual rate in the third estimate from a 3.0% gain in the second estimate, with strong upward adjustments to nondurable goods spending and services spending, offset by a slight downward adjustment to the surge in durable goods spending.

Private inventories were up $49.6 billion in the third estimate, a stronger increase than the $46.2 billion rise in the second estimate.

Nonresidential fixed investment was revised down to a 0.9% growth pace from the 1.3% increase in the advance estimate, while residential fixed investment was unrevised at a 9.6% rate of growth.

Government spending was revised down slightly to a 0.2% growth pace from the 0.4% gain reported in the second estimate.

The net export gap was revised wider to $605.0 billion from $599.6 billion in the second estimate. Exports were revised down to a 4.5% rate of decline, while imports were revised up to a 9.0% rate of growth.

Real final sales were revised up to a 1.1% growth pace from the 0.9% rate seen in both the advance and second estimates.

The chain price index was revised up slightly to a 2.1% increase from the 2.0% rise in the second estimate. The closely watched core PCE price index was revised up to a 1.3% gain from the 1.2% increase in the second estimate. The year/year rate for this measure was unrevised at 1.7%, the same as the second estimate and in the third quarter.

Analysts expect first quarter GDP to be mildly softer, due in part to the Federal Government hiring freeze, delayed tax returns, and the usual issue of residual seasonality.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.
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