GDP was REVISED DOWN by 0.8 points to 2.4% in this second estimate of economic activity for 2013 Q4. This was lower than market expectations for a downward revision to 2.5%. Economic activity is now 2.5% ABOVE its year ago level and 6.2% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new December data, this revision suggests that the economy lost momentum at the end of the quarter.
Consumer Spending was revised lower and grew modestly. Business Fixed Investment was adjusted higher, increasing at a moderate pace. Residential Investment was revised modestly higher but still fell moderately. Inventory Investment was revised modestly lower from moderate accumulation to modest accumulation. Net Exports were revised lower with a small decline in Exports and modest growth in Imports. Government Purchases were revised slightly lower and fell for the 9th time in the past 12 quarters.
As a result of all of these changes, Real Final Sales was revised moderately lower while Real Domestic Demand was also revised slightly lower. The GDP Price Index REVISED UP by 0.3 points to 1.7%, compared with market expectations of a slight decline to 1.3%. Economy-wide prices are now 1.4% ABOVE its year ago level.
Bottom Line: Economic activity was moderately lower than previously estimated in 2013 Q4. In final sales categories, fixed investment and residential investment were revised higher while net exports, consumption, and government purchases were revised lower. The consumption contribution declined by 0.53% and inventory investment was revised lower by 0.28% versus the advance report. The data indicates that 2014 Q1 GDP is tracking in line with the consensus estimate of 2.1%.