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GDP: 4Q Final Revisions add 0.2% to 2.1%

March 30, 2017

Bottom Line: Economic activity was stronger in 2016 Q4-16 from previous reports. Most of the upward revision was to consumption and was largely due to new December data, suggesting the quarter ended stronger than previously thought. Overall, economic activity is now a modest 1.9% above its year ago level. 2017 Q1 ends tomorrow. The data released so far suggest that 2017 Q1 economic activity grew at a similar pace to Q4-16 -- the median consensus is 1.9% but the dispersion is somewhat wider than usual due to the wide gap between hard data and "soft", survey data. The NY Fed's forecast, which uses hard and soft data, is 2.96%, while the Atltanta Fed's "GDPNow" forecast, which only uses hard data, is 1.0%.

GDP was REVISED HIGHER by 0.2 percentage points to 2.1% in this third estimate for 2016 4th Quarter. This compared with market expectations for an upward revision to 2.0%. Economic activity is now 1.9% above its year ago level.

In final sales categories, consumption, imports, and residential investment were revised higher, while net exports, fixed investment, and government purchases were revised lower.

As a result of all of these changes, real final sales was revised up by 0.1 percentage points to 1.1% while real domestic demand was revised up by 0.3 percentage points to 2.8%.

The GDP Price Index was REVISED UP by 0.1 points to 2.1%, compared with market expectations of 2.0%. Economy-wide prices are now 1.6% ABOVE year ago levels. Economy-wide inflation hit a cyclical peak of 3.4%in 2006 Q2 and reached a cyclical nadir of 0.2% in 2009 Q3.

Article by Contingent Macro Advisors