Friday, February 26, 2010

Q4 GDP Revised to 5.9%

by Bill McBride on 2/26/2010 08:30:00 AM

The headline GDP number was revised up to 5.9% annualized growth in Q4 (from 5.7%), however most of the improvement in the revision came from changes in private inventories. Excluding inventory changes, GDP would have been revised down to around 1.9% from 2.2%.

This table shows the changes from the "advance estimate" to the "second estimate" for several key categories:

 AdvanceSecond Estimate
GDP5.7%5.9%
PCE2.0%1.7%
Residential Investment5.7%5.0%
Structures-15.4%-13.9%
Equipment & Software13.3%18.2%
Note that PCE and Residential Investment (RI) - the two leading categories - were both revised down in Q4.

Changes in private inventories are transitory (only lasts a few quarters at the start of a recovery), and although the headline number was revised up, final demand was weaker than in the advance estimate.

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