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4Q20 GDP: Upward Revisions

March 25, 2021
Bottom Line:  The third estimate of 4th Quarter 2020 GDP was revised higher, driven by an increase in inventory investment late in the quarter.  Consumption was revised a touch lower, suggesting the consumer slowed more than previously reported in December. Overall, these revisions were minor and confirmed that while consumption continued to grow in the 4th Quarter, the pace of gains slowed sharply.  The recovery was driven by housing and manufacturing. Of course, these data are old news, with the close of the 1st Quarter of 2021 less than a week away.   The median of Bloomberg consensus estimates for the 1st Quarter was 4.8% quarter-over-quarter annualized this morning, with the Atlanta Fed's GDP Now at 5.4%.  We suspect growth will initially come in around 5% but then see negative revisions to bring it near 4.5% amid weather-related volatility and difficult seasonal adjustments.
GDP was REVISED HIGHER by 0.2 percentage points to 4.3% in this third estimate for 2020 4th Quarter.   This compared with market expectations for no change revision to 4.1%. Economic activity was 2.4% below its year-ago level.
In final sales categories, residential investment, government purchases, and net exports were revised higher while, fixed investment and consumption were revised lower.
As a result of all of these changes, real final sales were revised down slightly to 2.9% while real domestic demand was revised down by 0.1 percentage points to 4.4%.

The GDP Price Index
was REVISED LOWER by 0.10 points to 2.1%, compared with market expectations of 2.1%. Economy-wide prices were 1.3% ABOVE year-ago levels.