WASHINGTON — The U.S. fourth-quarter gross domestic product revision was up 0.6%, the same pace as in the prior estimate, but even with components that were slightly more favorably aligned, the key for the future is that first-quarter real growth components in hand remain slow.

The fourth-quarter revision reflects a narrower December trade gap than assumed, but lower inventories, and thus real final sales, originally rose 1.9%, printing a more favorable increase of 2.1%. The last time inventories subtracted so much from growth was the second quarter of 2005. The revisions reflect newly available data that substituted for estimates.

Also, fourth-quarter salary accruals rose $7 billion, reflecting “irregular pay” such as bonuses. This sets up for slightly better growth in the first quarter.

Consumption and investment components were revised slightly lower. A remaining anomaly in the GDP accounts was a 0.3% decline  for national military spending — probably just a budget quirk given the massive amounts allocated for the war in the Mideast.

Overall, there is nothing new in the GDP report to alter the conclusion that the fourth quarter was dismal and the first quarter remains sluggish. Auto and retail sales data, for instance, are pointing towards a first-quarter collapse in consumption as high energy and food prices and the housing crisis cause the consumer to pause.

Core core personal consumption prices were up 2.7% — originally a 2.6% rise — after a 2.0% gain in the third quarter. Overall GDP prices were also up 2.7% after a 1.0% increase in the third quarter. The gross domestic purchases price index was increased 0.1 point to a 3.9% rise. All the up-revisions reflected revised seasonal factors for the consumer price index which boosted PCE inflation.

— Market News International

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