Large GDP revision released
As we mentioned 2 weeks ago the advance GDP release made several assumptions that proved to be incorrect. Therefore, the preliminary release (GDP release order is: Advance, Preliminary, Final) has revised the advance number down from 3.5% to 2.2% – a HUGE revision. This is more in line with what we expected. We now have 3 consecutive low growth quarters – the last 9 months of 2006. In total, GDP growth averaged about 2.25% growth during the last 9 months of 2006. Clearly, Fed rate hikes have slowed things down.
You can read the latest GDP report here – released on 2/28/2007.
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.2 percent in the fourth quarter of 2006, according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.
The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.5 percent (see “Revisions” on page 3).
The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, state and local government spending, and federal government spending that were partly offset by negative contributions from private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP,decreased.
The small acceleration in real GDP growth in the fourth quarter primarily reflected a downturn in imports and accelerations in PCE, in exports, and in federal government spending that were partly offset by downturns in private inventory investment, in equipment and software, and in nonresidential structures.
Final sales of computers contributed 0.23 percentage point to the fourth-quarter growth in real GDP after contributing 0.07 percentage point to the third-quarter growth. Motor vehicle output subtracted 1.24 percentage points from the fourth-quarter growth in real GDP after contributing 0.76 percentage point to the third-quarter growth.