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4Q21 GDP: Downward Revisions, Hints of Concern

March 30, 2022
Bottom Line:  The final estimate of 4th Quarter GDP showed notably slower consumption gains than first reported, with the net revisions taking a tenth off the annualized tally, back down to 6.9%, as initially reported. Consumption gains were just 2.5% annualized, down from the advanced reading of 3.3%, as the consumer slowed over the 4th Quarter (though we should note that difficult seasonal adjustments continued to skew the reported consumption figures). Residential investment was revised notably higher, as was inventory investment. The upward revision to inventories will likely further dampen 1st Quarter growth forecasts as most economists (ourselves included) expect a reversal in the 4Q gains. Overall, this report gives further credence to the notion that consumption ended the 4th Quarter much slower than it started, likely confirming estimates showing a slower start to consumption in the current quarter. Forecasts for the current quarter, which ends tomorrow, stand around 1.5% annualized.
GDP was REVISED LOWER by 0.1 percentage points to 6.9% in this third estimate for 2021 4th Quarter.
This compared with market expectations for no change revision to 7.0%. Economic activity was 5.5% above its year-ago level. In final sales categories, residential investment and imports were revised higher while, exports, consumption, fixed investment and government purchases were revised lower.  As a result of all of these changes, real final sales were revised down by 0.5 percentage points to 1.5% while real domestic demand was revised down by 0.3 percentage points to 1.7%.

The GDP Price Index
was nearly unchanged at  7.1%. Economy-wide prices were 6.0% ABOVE year-ago levels.
Article by Contingent Macro Advisors