January 30, 2014

4Q13 Gross Domestic Product, Initial Reading (013014): An Annualized 3.2%

Filed under: Economy,Taxes & Government — Tom @ 8:14 am


  • The Associated Press yesterday afternoon had an annualized 3.2 percent or 3.3 percent.
  • Bloomberg has 3.2 percent.

Quick thoughts:

Readers here know that I’m skeptical that personal consumption kept a pace consistent with this level of growth. On the other hand, Mark Zandi at Moody’s claimed in the January ADP Payroll conference call that the inventory element of GDP would increase again, which would be a surprise to me given the third quarter’s steep increase (about 1.6 points of GDP) and increases the previous two quarters. So maybe the two factors will offset each other.

The report will be here at 8:30.

HERE IT IS (full HTML): Well, the advance release is in line with predictions —

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 3.2 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.1 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4 and “Comparisons of Revisions to GDP” on page 5). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2014.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory investment, and state and local government spending that were partly offset by negative contributions from federal government spending and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the fourth quarter reflected a deceleration in private inventory investment, a larger decrease in federal government spending, a downturn in residential fixed investment, and decelerations in state and local government spending and in nonresidential fixed investment that were partly offset by accelerations in exports and in PCE and a deceleration in imports.


  • Personal consumption, +2.26 (1.10 points on Housing and Utilities alone).
  • Gross private investment, +0.56 (+0.42 inventories, +0.14 all other elements, including -0.32 in residential fixed investment).
  • Net exports, +1.33 (+1.48 exports, -0.15 imports), up from virtually zero the previous two quarters; biggest positive in several years.
  • Government (and there will be wailing and gnashing of teeth), -0.93 (-0.68 points in national defense).

Assessment: I would be surprised if the consumption or net exports figures hold up in future revisions. Though there are obviously other elements in consumption, the overall number doesn’t track with much more subdued Christmas shopping season results.

The private investment number may go up a bit, because I don’t think the residential side slowed quite that badly. On the other hand, Zandi thought the inventory increase would be about $75 billion, and it came in at $157 billion in current dollars ($127 billion in 2009 dollars). So that figure could also come down in future revisions.


UPDATE: Zero Hedge — “enjoy the Q4 GDP surge – it won’t last into 2014.”

UPDATE 2, Feb. 1: I need to note that full-year-growth in 2013 was only 1.9 percent, down from 2.8 percent in 2012. Some “recovery.”


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