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Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown

There was much hope that when Q3 GDP soared to 5%, primarily on the back of Obamacare spending recalendarization and a massive consumption/personal saving data revision, that the US economy would finally enter lift-off mode. Those hopes were reduced by about 60% when moments ago the BEA announced that Q4 GDP was revised from the original 2.64% print to only 2.18%, which while better than expected, was the lowest economic growth rate since the "polar vortex."

The main reason for the revision: a substantial drop in growth contribution from private inventories, which instead of adding 0.82% to the bottom GDP line, only contributed 0.12% in Q4 following the first revision. To be sure, this was perfectly expected, and is exactly what we said would happen last month after the first inventory number:

... here is what Q4 inventories did: rising by $113.1 billion in Q4,
this was the second highest quarterly increase in the 21st century,
second only to September 2010
. It's all GDP-crushing liquidations from here.

 

Following out post, the BEA revised the entire data series.

Some other changes:

  • Personal Consumption was 2.83% of the final GDP, down from 2.87%
  • Fixed Investment was 0.71%, vs 0.37% before, a number that will plunge in Q1 as a result of the shale capex halt.
  • Net trade subtracted even more from growth, with Net Exports less Imports amounting to -1.16%, down from -1.02%
  • Government offset the decline modestly, subtracting -0.32% from growth, compared to -0.40% in the first revision.

Full breakdown below.