The upward revision was primarily due to an increase in inventory accumulation and to a lesser extent, an improvement in net-exports. However, most of this gain was offset by a downward revision to consumption. Consumption added 1.7 points to growth rather than the previously reported 2.0%.
Though total growth was slightly higher in this revision, the details of it are weaker. A greater amount of the growth picture over the quarter was due to inventory accumulation. Though this is still demand growth, the effects are temporary as it primarily reflects firms making short term inventory realignments. Real final sales growth, which removes inventories in order to get a measure of the underlying demand in the economy, was only 1.0%, compared to the previous 1.2%. This is quite modest. Moving forward, GDP growth will more closely follow the real sales trend as the inventory cycle comes to an end. Therefore, in order to start to drive down unemployment, real final sales growth will have to accelerate.
|annualized % change||Q3 2010||Previous||Q2 2010||Q1 2010||Q4 2009||Q3 2009|
|% contribution to r. GDP|