Wednesday, February 29, 2012

Fourth Quarter GDP Revised Up to 3%

Fourth quarter growth accelerated to 3%, up from 1.8% in the third quarter according to the BEA’s second estimate released this morning. The initial estimate reported fourth quarter GDP growth of 2.8%. For all of 2011 the economy grew at 1.6%, led by investment and exports. During this time, government spending contracted

Fourth quarter growth acceleration was led primarily by a large shift in inventories, which changed from dragging 1.35% on growth, to aiding growth by 1.88%. This amounted to about two thirds of growth over the quarter.

The revision from the initial estimate was led primarily by faster growth in fixed investment and lower imports. Consumer and government spending both saw minor upward revisions as well. Exports and inventory accumulation saw revisions that dragged on growth slightly.

Looking forward, the accumulation of inventories at the end of 2011 does not bode well for growth in early 2012. Furthermore, trade had begun to drag on growth in the fourth quarter and is likely to continue to do so as headwinds from Europe persist.

Read the report.

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