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GDP: 4Q Unchanged at 1.9% vs. Expectations for 2.1%

February 28, 2017

Bottom Line: Economic activity was unchanged from the previously estimated pace of 1.9% in 2016 Q4-16. In final sales categories, consumption was revised higher while fixed investment, government purchases and residential investment were revised slightly lower.. The data indicates that 2017 Q1 GDP is tracking in line with the consensus estimate of 2.2%.

GDP was unchanged at 1.9% in this second estimate of economic activity for Q4-16. This was lower than market expectations for an upward revision to 2.1%. Economic activity is now 1.9% ABOVE its year ago level and 12.1% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new December data, this revision suggests that the economic activity was little changed at the end of the quarter.

Consumer Spending was revised higher by 0.52% to 3.0%, contributing 2.05% to economic growth. Business Fixed Investment was revised lower by -1.07% to 1.3%, contributing 0.17% to economic growth. Residential Investment was revised lower by -0.59% to 9.6%, contributing 0.35% to economic growth. Inventory Investment was revised slightly lower, contributing 0.94% to economic growth.

Net Exports were unchanged, contributing -1.70% to economic growth. Government Purchases were revised slightly lower but grew slightly for the 9th time in the past 12 quarters, contributing 0.06% to economic growth.

As a result of all of these changes, Real Final Sales was revised slightly higher while Real Domestic Demand was revised slightly higher. The GDP Price Index was REVISED LOWER by -0.1 points to 2.0%, compared with market expectations of 2.1%. Economy-wide prices are now 1.6% ABOVE its year ago level.

Article by Contingent Macro Advisors