2010 Q4 GDP adjusted downward to 2.8%

posted at 9:30 am on February 25, 2011 by Ed Morrissey

Last month, the Obama administration claimed success with the 2010 Q4 annualized GDP growth rate estimate from Commerce of 3.2%.  Today, Commerce has issued its customary follow-up estimate, and the news is not as bright.  Their 2010 Q4 estimate dropped to 2.8%, barely above Q3′s 2.6% — with one more estimate still left:

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 2.8 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent.

The GDP estimates released today are based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 3.2 percent (see “Revisions” on page 3). …

The small fourth-quarter acceleration in real GDP primarily reflected a sharp downturn in imports, an acceleration in PCE, an upturn in residential fixed investment, and an acceleration in exports that were mostly offset by downturns in private inventory investment and in federal government spending, a deceleration in nonresidential fixed investment, and a downturn in state and local government spending.

Over the last two years, the pattern from Commerce has been to advance a flashy number initially, then back down in later estimates.  The worst case came early, when 2009 Q3 got revised to 2.8% from 3.5%.  In 2010 Q3, the pattern reversed itself, with GDP estimate rising in each new estimate to the 2.6% level.

Reuters doesn’t exactly use the U-word, but notes that its economists expected an upward revision in GDP:

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 3.3 percent pace. The economy expanded at a 2.6 percent rate in the third quarter. For the whole of 2010, the economy grew 2.8 percent instead of 2.9 percent.

The outlook is rather poor, thanks to surging oil prices from the crises in the Middle East and North Africa:

In addition, consumer spending — which accounts for more than two-thirds of U.S. economic activity — grew at a 4.1 percent rate in the final three months of 2010 instead of 4.4 percent.

It was still the fastest since the first three months of 2006 and was an acceleration from the third quarter’s 2.4 percent rate. But there are concerns that surging crude oil prices could hurt consumer spending and slow the economy’s recovery.

In other words, we have not freed ourselves from stagnation.  The one area that held the most promise, consumer spending, will likely get curtailed thanks to the inflation-multiplying effect of higher oil prices.  If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East.  Our GDP might be going up instead of sideways at this point.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Expected.

forest on February 25, 2011 at 9:32 AM

Unexpected.

Knucklehead on February 25, 2011 at 9:33 AM

It is even more bs than that since most of the GDP is coming from higher prices. But shhh don’t say anything play like you believe the government.

PierreLegrand on February 25, 2011 at 9:35 AM

Joe Biden predicted 7% growth from here to eternity. What went wrong?

ted c on February 25, 2011 at 9:35 AM

QE3 coming?

Mark1971 on February 25, 2011 at 9:35 AM

QE3 coming?

Mark1971 on February 25, 2011 at 9:35 AM

Yep , heading for the nearest iceberg.

the_nile on February 25, 2011 at 9:37 AM

wait till the inflation/stagflation hits harder.

rob verdi on February 25, 2011 at 9:39 AM

Still waiting on the first Tim Geithner edition 100$ bills to roll off the presses, giving us the confidence we need.
//

tomg51 on February 25, 2011 at 9:40 AM

How many times has this happened since Obama took office? Unemployment numbers, housing numbers, GDP numbers, some kind of numbers are released and the media says endlessly, “Hey, look, this proves Obama rules!” Then, a few weeks later, the number is always revised downward, and yet it’s never a sign of the failure of Democratic policies, or reported on with even an eighth the same fervor. I cannot count the number of stories following just this pattern I’ve seen on HotAir the last two years.

I was just sort of coming political-paying-attention age during the Clinton administration, but is this the way the press has always concealed information from the public? Because it seems like the longer the Obama administration goes on (it’s been, what, eight decades now?), the more blatant it becomes.

WesternActor on February 25, 2011 at 9:41 AM

What went wrong?

ted c on February 25, 2011 at 9:35 AM

The 2008 election, for starters.

jwolf on February 25, 2011 at 9:42 AM

QE3 coming?

Mark1971 on February 25, 2011 at 9:35 AM

Good God, please don’t give me nightmares. As if the cost of everything wasn’t rising enough already?

Doughboy on February 25, 2011 at 9:43 AM

If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East.

True dat. However what we really need to do is transition over to natural gas for most of our transport and electricity needs while we work on building nuke plants. When we have enough nukes on line we can then look at going with electric vehicles provided we find a better solution for batteries than using Lithium.

MJBrutus on February 25, 2011 at 9:44 AM

I look forward to paying $6 for a loaf of bread in the interest of saving Gaia.

Bishop on February 25, 2011 at 9:45 AM

Over the last two years, the pattern from Commerce has been to advance a flashy number initially, then back down in later estimates.

It’s called corruption. Would make a great story for some enterprising news reporter, no? Holding my breath…

Rational Thought on February 25, 2011 at 9:45 AM

I heard that Timmy Geithner said that prices will stablize in a couple weeks after Libya calms down and prices will drop.

This is horrible news! We all know Timmy is correct about as often as Joe BiteMe! This means prices are going to keep getting worse!

jeffn21 on February 25, 2011 at 9:47 AM

True dat. However what we really need to do is transition over to natural gas for most of our transport and electricity needs while we work on building nuke plants. When we have enough nukes on line we can then look at going with electric vehicles provided we find a better solution for batteries than using Lithium.

MJBrutus on February 25, 2011 at 9:44 AM

And who’s gonna pay 40 grand for a Chevy Volt? Even in a good economy, you’d be hard pressed to find middle and lower income folks who’d be willing to shell out that much coin when they could have a car with an internal combustion engine for half the price.

Doughboy on February 25, 2011 at 9:48 AM

Isn’t the Obamaconomy great, folks?

Good Lt on February 25, 2011 at 9:48 AM

It is even more bs than that since most of the GDP is coming from higher prices. But shhh don’t say anything play like you believe the government.

PierreLegrand on February 25, 2011 at 9:35 AM

Bingo. Not just energy prices, but food is way up, too. So, what the heck, let’s keep turning our food into ethanol! Gotta keep Iowa happy.

iurockhead on February 25, 2011 at 9:48 AM

jeffn21 on February 25, 2011 at 9:47 AM

Most analysts say that the price of crude currently has the loss of Libya priced in. The loss of supply from there looks like it will be made up for from other OPEC nations, especially the Saudis.

MJBrutus on February 25, 2011 at 9:49 AM

wait till the inflation/stagflation hits harder.

rob verdi on February 25, 2011 at 9:39 AM

It’s hitting now, but they keep sugar coating it by saying “with food and energy removed”.

The simple fact of the matter is that for 90% of us, food and energy is the bulk of spending.

John Deaux on February 25, 2011 at 9:50 AM

Doughboy on February 25, 2011 at 9:48 AM

1. That’s part of why I said we need a better solution for batteries. The other reason is because it creates a choke point for Lithium supplies mean the potential replace of OPEC with LPEC.

2. Prices will drop even on the current generation if production runs dramatically increase.

MJBrutus on February 25, 2011 at 9:51 AM

This ‘news’ is actually even more unexpectedly expected than I could have predicted. (Well, maybe not;-)

alwyr on February 25, 2011 at 9:51 AM

Plugs Biden 4/23/10: ‘Well, I’m here to tell you, some time in the next couple of months, we’re going to be creating between 250,000 jobs a month and 500,000 jobs a month.”

“We caught a lot of bad breaks on the way down,” Biden added. “We’re going to catch a few good breaks because of good planning on the way up.”

kevinkristy on February 25, 2011 at 9:52 AM

Denninger’s take:

GDP: Revised Down (Again)

Again we have the Goebbels Information Bureau that puts forward “advance” estimates that are ridiculously rosy, and then is forced to revise them downward.

It of course gets “better” if you look at the somewhat-more-detailed version of the report:

Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — decreased 0.6 percent in the fourth quarter, in contrast to an increase of 4.2 percent in the third.

Wait a second…. I thought that GDP increased and PCE was up too?! Well, yes. We are exporting some more, and that’s where you’ve seen the “growth.” But domestic purchases went down despite the claimed PCE numbers, and thus the so-called “economic recovery” from the standpoint of the United States consumer – you know, the people that matter in this country and which has to be funded with current personal economic output – in fact reverted to a net loss in the 4th quarter.

(emphasis original)

flyfisher on February 25, 2011 at 9:53 AM

NEWS FLASH>>>Illinois tourism is up in recent days as an influx of fleeing Wisconsin and Indiana Democrats have been filling Illinois’ hotels.
/snark

ChicagoBlues on February 25, 2011 at 9:53 AM

2. Prices will drop even on the current generation if production runs dramatically increase.

MJBrutus on February 25, 2011 at 9:51 AM

Over time, yes these manufacturers will find ways to build the cars at a lower cost. That happens with any type of technology. The problem is they will likely be more expensive than gas-powered cars for the foreseeable future. And unless gas is around 10 bucks a gallon, people living on a tight budget will always opt for the cheaper car.

Doughboy on February 25, 2011 at 9:55 AM

Count it!

rogerb on February 25, 2011 at 9:56 AM


an upturn in residential fixed investment,

Really?????
WHERE???

Liars and Cheats, the whole lot of em!

golfmann on February 25, 2011 at 9:57 AM

Doughboy on February 25, 2011 at 9:55 AM

Please look at my original post again. I specifically said transition first to natural gas while we ramp up nukes. That will take at least 2 decades, giving us time to get battery technology right.

MJBrutus on February 25, 2011 at 9:58 AM

Guns are still selling like crazy, I had to take a number at Cabelas last Saturday. I got #82 and the sales guys were still still on #60 or so.

Funny how things work as the economy collapses around us.

Bishop on February 25, 2011 at 10:03 AM

Please look at my original post again. I specifically said transition first to natural gas while we ramp up nukes. That will take at least 2 decades, giving us time to get battery technology right.

MJBrutus on February 25, 2011 at 9:58 AM

How about ‘sand-oil’? If I recall correctly, North America is flush with this difficult to refine but abundant source of oil. Shouldn’t that be developed as well?

ChicagoBlues on February 25, 2011 at 10:03 AM

ChicagoBlues on February 25, 2011 at 10:03 AM

If it becomes cheaper to extract and refine, sure. Right now it is more expensive.

However, I would like to see oil in general be phased out as fuel in favor of natural gas to achieve economically competitive energy independence for us. Even if we exploit shale and sand and off shore, we will still need to import oil (even if you don’t count Canadian oil as imported).

MJBrutus on February 25, 2011 at 10:07 AM

NEWS FLASH>>>Illinois tourism is up in recent days as an influx of fleeing Wisconsin and Indiana Democrats have been filling Illinois’ hotels.
/snark

ChicagoBlues on February 25, 2011 at 9:53 AM

Visit Illinois!
We Hide Your Ass

Odie1941 on February 25, 2011 at 10:09 AM

If these numbers are calculated the same way unemployment figures are…the economy really contracted…

PatriotRider on February 25, 2011 at 10:09 AM

Show of hands:

People whose personal observation of the economy in their area would lead them to believe that GDP is NEGATIVE and has been for some time now.

Liars, cheats, thieves.

or

Looters and moochers.

Take your pick.

turfmann on February 25, 2011 at 10:10 AM

2.8 is still overstated.

Vashta.Nerada on February 25, 2011 at 10:11 AM

MJB, I totally agree, but we have the ability to break the OPEC cartel within a much shorter time frame by pursuing this energy source with minimal disruption to our current delivery structure. Check this link out:
http://www.energy.gov.ab.ca/OurBusiness/oilsands.asp
As we ramp this up, we develop in parallel, the electrical delivery systems, including nuclear and natgas, to move us away from fossil based fuels.
Thoughts?

ChicagoBlues on February 25, 2011 at 10:12 AM

If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East.

9 out of 10 academics in the White House beg to differ.

VibrioCocci on February 25, 2011 at 10:14 AM

The increase in GDP is equal to the increase in the workforce. It is flat.

seven on February 25, 2011 at 10:16 AM

The way my electric bill is skyrocking here in Jersey, I wouldn’t even remotely consider any electric car even if it was cheap. Apparently my refrigerator eats a ton of electricity since everything else mostly is natural gas. I can’t imagine what a car would eat to travel 60 miles per day.

NJ Red on February 25, 2011 at 10:16 AM

9 out of 10 academics in the White House beg to differ.

VibrioCocci on February 25, 2011 at 10:14 AM

Sounds like the one smart guy in the room was ignored.

ChicagoBlues on February 25, 2011 at 10:17 AM

ChicagoBlues on February 25, 2011 at 10:12 AM

I’m with you, but I can’t see it as more than a stop gap or insurance policy in case of trouble in Saudi Arabia, for example. Oil is a fungible commodity and if world wide prices rise so will oil from that source. Also our interests would still be endangered by a large ME problem because our allies will still rely on their oil. Unless we (and Canada) can produce enough to be net exporters of oil we will not escape the bind we’re in. As you say, though, it can help us as we transition to a source that we can control.

MJBrutus on February 25, 2011 at 10:18 AM

Recovery Spring coming – Joe Biden

antisocial on February 25, 2011 at 10:20 AM

The way my electric bill is skyrocking here in Jersey, I wouldn’t even remotely consider any electric car even if it was cheap. Apparently my refrigerator eats a ton of electricity since everything else mostly is natural gas. I can’t imagine what a car would eat to travel 60 miles per day.

NJ Red on February 25, 2011 at 10:16 AM

That’s the nasty fact about electric cars. As electricity rates ‘necessarily skyrocket’ because of the policies of President Jackass, electric cars become uneconomic. In fact they already are in the strongly democratic states that have implemented loony cap-and-trade-like programs.

slickwillie2001 on February 25, 2011 at 10:20 AM

MJB, I see your point and agree that it should be looked at as an insurance policy and a transition means. Gotta run, need to get some sleep. Night shift patrol work has it’s price.
Good night (day) to HA family. Keep up the good fight.

ChicagoBlues on February 25, 2011 at 10:23 AM

slickwillie2001 on February 25, 2011 at 10:20 AM

Step one to implement any sane strategy: Replace President Jackass!

MJBrutus on February 25, 2011 at 10:27 AM

If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East. Our GDP might be going up instead of sideways at this point.

Plus there would be royalties from said drilled oil.

marinetbryant on February 25, 2011 at 10:33 AM

You forget, Barry WANTS $5/gallon gasoline.

GarandFan on February 25, 2011 at 10:36 AM

Oil is a fungible commodity and if world wide prices rise so will oil from that source.
MJBrutus on February 25, 2011 at 10:18 AM
++++++++++++++++
Please avoid the keyboard when you’ve been drinking…

fabrexe on February 25, 2011 at 10:37 AM

If a trillion dollars got us 2.8% growth, then logically, borrowing four trillion more dollars from the Chinese will get us 11.2% growth!

/Krugman

mankai on February 25, 2011 at 10:39 AM

Obstructionist Democrats!
.
My comment doesn’t really have any relevance to this thread, I just thought I’d remind people.

ExpressoBold on February 25, 2011 at 10:41 AM

fabrexe on February 25, 2011 at 10:37 AM

Would you care to explain, or is that bit of wit the sum total of your contribution to the discussion?

MJBrutus on February 25, 2011 at 10:42 AM

I’m in a dilemma…I want outrageous gas prices to get President Jackass out of office…but I also can’t afford them.

NJ Red on February 25, 2011 at 10:42 AM

It seems foolish to anticipate lower crude prices in a few weeks with some resolution in Libya. First, Libya won’t be a settled issue in a few weeks. Second, the whole middle east is in play and will continue to be in play now that the United States has become completely undependable as an ally and stabalizing force. The middle east is a new ball game, with resulting uncertainty, just like the United States.

GaltBlvnAtty on February 25, 2011 at 10:52 AM

What about the GDP not counting deficit spending?

If a private corporation tried to tell its shareholders how much its cashflow was “growing”, by adding current LOANS into its P/L sheet, its CEO and board of directors would all be in prison.

logis on February 25, 2011 at 10:59 AM

Hide the decline. Fake GDP numbers just like everything else socialists do. Look, take out the government spending.

Put back into the inflation calc the price of food and fuel, COUNT ALL the unemployed.

Then you’ll have reality. See shadowstats.com

dogsoldier on February 25, 2011 at 11:02 AM

@mankai “If a trillion dollars got us 2.8% growth, then logically, borrowing four trillion more dollars from the Chinese will get us 11.2% growth!

/Krugman”

Damn it, stop giving them ideas.

Over50 on February 25, 2011 at 11:04 AM

2.8 percent isn’t bad…in a normal year. But we had to melt down the credit cards to get it. We burned the house down, but at least we are warm.

I do recall Democrats and the MSM saying 2.8 percent was anemic at one point…hmmm…oh, yeah, it was during the Bush years.

Asher on February 25, 2011 at 11:18 AM

Mark1971 on February 25, 2011 at 9:35 AM

:) That is all they have left in their pea-shooter. If we lose reserve currency status they won’t even have that.

chemman on February 25, 2011 at 11:18 AM

Government economic data is just another example of Sturgeon’s Law:

“Ninety percent of everything is crap”

ZenDraken on February 25, 2011 at 11:18 AM

I was just sort of coming political-paying-attention age during the Clinton administration, but is this the way the press has always concealed information from the public? Because it seems like the longer the Obama administration goes on (it’s been, what, eight decades now?), the more blatant it becomes.

Buggering the numbers has been going on a lot longer than Dear Leader Marxist Obama. Matter of fact god Reagan indulged in a bit of numbers chicanery…just saying.

Watch this and understand that it truly is us against the government in all of its permutations. Angelo Codevilla got it EXACTLY right when he described the elite.

That HOT AIR didn’t give that essay a LOT of attention depressed me. I thought better of Ed and Allah.

PierreLegrand on February 25, 2011 at 11:19 AM

2.8 percent isn’t bad…in a normal year. But we had to melt down the credit cards to get it. We burned the house down, but at least we are warm

2.8 is terrible because to GET to 2.8 a whole lot of numbers were twisted in ways that god never intended.

PierreLegrand on February 25, 2011 at 11:21 AM

dogsoldier on February 25, 2011 at 11:02 AM

As in any discussion the meaning of words has consequences. By changing the metrics used the government is able to con those who don’t know how to find the real information.

chemman on February 25, 2011 at 11:21 AM

PierreLegrand on February 25, 2011 at 11:19 AM

True enough, but have to admit that this crew pretty much jumped ol’ Jaws with their “created or saved” metric.

MJBrutus on February 25, 2011 at 11:21 AM

You can always use the public money and the personal shopper for your needs, right, Moochelle?

Can you imagine if Nancy Reagan had done this?

tarpon on February 25, 2011 at 11:31 AM

Trolls again: conspicuously absent.

CWforFreedom on February 25, 2011 at 11:38 AM

WaPo is spinning the hell out of this news today, claiming that it is the result of spending cutbacks by state and local governments! Translation – you racist teabagging Republicans in the states and counties are preventing the economic recovery. And the upshot is that if we just raise taxes some more, we can continue spending our way to prosperity.

Unbelievable.

rockmom on February 25, 2011 at 12:38 PM

Not just energy prices,

I use propane to heat my home. In November, I had 200 gallons delivered which cost $475. In just had another 200 gallons delivered and it cost $603. That’s a 21% increase in just 3 months.

But not to worry, inflation is under control…

karl9000 on February 25, 2011 at 1:19 PM

karl9000 on February 25, 2011 at 1:19 PM

Inflation is kind of a tricky thing to measure. Sure cotton, many foods and energy are rising. OTOH home prices are continuing their deflationary trend. What’s more, most consumer goods are not on the rise. Should the economy pick up and generate the kind of growth we should be seeing in a recovery then I would expect inflation in these other sectors to kick in due to Helcopter Ben.

MJBrutus on February 25, 2011 at 3:25 PM

MJBrutus on February 25, 2011 at 3:25 PM

I trade Crude Oil futures for a living. I’m not a speculator; I trade the spot market with at most 2 contracts. Right now, April crude oil (American) is trading around $98 a barrel, up from $88 a barrel when I started trading the April contracts on February 17th. Sure, some of that is due to the Mideast situation, but prices have been trending upwards BEFORE the unrest started. All that will translate to higher prices for everything.

Home prices are falling in reaction to a speculative price that occurred years ago, as we all know. This has a net effect of hurting people’s bottom line since so many of us (including me) were counting on our homes at least retaining value, if not going up.

Consumer goods aren’t rising right now because excess inventory is being cleared out, and sellers are trying to keep at least some cash flow going. Wages are going to have to go down or stagnate to maintain consumer prices at current levels since the replacements costs for those goods going out the door today are going to be higher tomorrow due to increases in material costs and transportation/distribution costs. We’re living on borrowed time right now.

I don’t see how the economy is going to improve. We’re limiting our own oil production, we’re inflating the dollar via repetitive QEs, and our state and federal governments are overspending in an obscene fashion.

It’s going to get … bumpier, real soon.

Sorry for the rant. I’m not feeling overly optimistic given who we have in charge right now…

karl9000 on February 25, 2011 at 4:05 PM

Why don’t they learn to just subtract a point the first time around?

Sorry for the rant. I’m not feeling overly optimistic given who we have in charge right now…

karl9000 on February 25, 2011 at 4:05 PM

Yeah, I’ve felt that way since the 2007 elections.

Dr. ZhivBlago on February 25, 2011 at 5:35 PM

karl9000 on February 25, 2011 at 4:05 PM

I’m glad to hear from someone so knowledgeable! I agree with most of what you’ve said, aside from a quibble about the cause of the housing bubble.

It sounds as though you basically concur with I said then about inflation. It is present in some places and not in others (note I didn’t say that the deflation in housing for example was a good thing). I’m not optimistic on the economy either. I just don’t see an inflationary problem unless the economy improves to where demand picks up in earnest. “The Bernank” thinks he can stuff the genie in the bottle in the nick of time when that happens, I don’t share his confidence in himself.

MJBrutus on February 25, 2011 at 8:44 PM