4th Quarter GDP will be revised lower

The 4th Quarter 2006 GDP figure was an upside surprise to just about everyone that tracks the GDP data. It is now evident the number may have been overstated by as much as 1%. I would expect to see the revision somewhere in the 2.5% to 3% range once the final numbers come in. Below are a few links on the story:

Big downward revision to GDP coming

Revisiting GDP

US trade gap sets record again in 2006

Economists said the larger-than-expected December trade gap, combined with other economic data, would require the government to lower its estimate of fourth-quarter 2006 U.S. economic growth from 3.5 percent currently.

“The numbers might slice a little off GDP. … This week we also have retail sales and other data that could have an offsetting effect. So far it looks like GDP will get revised down 1.2 to 1.3 percentage points,” said Doug Smith, chief economist for the Americas at Standard Chartered in New York.

Keith Hembre, chief economist with FAF Advisors in Minneapolis, also expected a downward revision in fourth-quarter gross domestic product.

“It didn’t really pass the smell test in the first place. … It looks like 2.5 percent now,” Hembre said.

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