"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Friday, March 25, 2011

Q4 2010 GDP, Final Revision

GDP, or Gross Domestic Product, is the sum of all private domestic consumption plus gross private domestic investment plus government spending plus the current trade balance. This is a huge economic data point, because it represents the economic health of a nation. It gets reported three times in a quarter - the first month is the advance figures, the second month is the preliminary revision, and the third month is the final revision. This month, we're getting the final revision.
Now, things weren't looking all that good when the preliminary revision was released. Real GDP was revised downward to 2.8%, the GDP price index[1] came in at 2.1%, and the "core" GDP price index came in at 1.2%.
Looking towards the Q4 final revision, the Econoday-surveyed analysts are expecting real GDP to be revised upwards to 3.1%. Of course, they're also expecting to see the GDP price index remain unchanged at 0.4%[2], so take their predictions with a grain of salt.
Now, turning to the Bureau of Economic Analysis, we examine the Fourth Quarter 2010 final estimate for GDP. GDP increased at an annual rate of 3.1% in Q4 (right in line with expectations). The BEA credits a downturn in imports, an increase in personal consumption expenditures, an upturn in residential fixed investments, and an acceleration in exports for the GDP growth. The price index increased 2.1%, with the "core" price index increasing 1.1%.
[1] One measure of inflation.
[2] No, I have no idea where they're getting that from either. The Bureau of Economic Analysis report was pretty clear in showing that the Q4 preliminary revision GDP price index was 2.1%.

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