Revised Q4 GDP growth rate: 3.0%

posted at 9:15 am on February 29, 2012 by Ed Morrissey

The Commerce Department issued its scheduled revision to the 2011 fourth-quarter GDP growth rate this morning, lifting it from the advance report of 2.8% annualized growth to 3.0%.  Most of the growth occurred in inventory expansion, although real final sales improved slightly from the first report:

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 3.0 percent in the fourth quarter of 2011 (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 1.8 percent. …

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

However, despite the incremental improvement seen in these figures, there are a couple of serious red flags. Imports increased even more than previously thought, exports declined, and real final sales of domestic product — GDP minus inventory additions — still lagged far behind the overall GDP rate:

Real exports of goods and services increased 4.3 percent in the fourth quarter, compared with an increase of 4.7 percent in the third. Real imports of goods and services increased 3.8 percent, compared with an increase of 1.2 percent. …

The change in real private inventories added 1.88 percentage points to the fourth-quarter change in real GDP, after subtracting 1.35 percentage points from the third-quarter change. Private businesses increased inventories $54.3 billion in the fourth quarter, following a decrease of $2.0 billion in the third quarter and an increase of $39.1 billion in the second.

Real final sales of domestic product — GDP less change in private inventories — increased 1.1 percent in the fourth quarter, compared with an increase of 3.2 percent in the third.

This points to a demand dip in the first quarter of this year, which we saw yesterday in the durable-goods report — the worst in three years.  Expanding inventories in one quarter either means a sense that demand will explode or a drop in production in following months and quarters.  The durable-goods report provided an answer for what this inventory expansion meant.

Reuters takes a somewhat rosy look at the restatement:

The U.S. economy grew a bit faster than initially thought in the fourth quarter on slightly firmer consumer and business spending, which could help to allay fears of a sharp slowdown in growth in early 2012. …

Economists polled by Reuters had expected fourth-quarter GDP would be unrevised at a 2.8 percent pace. The economy grew at a 1.8 percent pace in the third quarter.

While the build-up in business inventories still accounted for much of rise in output in the last quarter, the revisions to GDP unveiled an improved tone for the first-quarter growth outlook.

Businesses were not as aggressive in their restocking efforts, which should help to allay fears of a sharper slowdown in output this quarter.

Well, one’s mileage may vary on that point, but consider this.  The difference in overall annualized GDP growth rates between Q3 and Q4 was 1.2%.  The difference between the rates of real final sales of domestic product was 2.1%.  That looks to me like a very aggressive restocking effort, and an artificial difference between the two quarters built entirely on that restocking effort in the face of weak demand.  It’s not recovery, and despite crossing a psychological barrier of 3%, it’s not even real growth of the kind that creates jobs in large enough numbers to get people back into the workforce.


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Comment pages: 1 2

Dave Rywall on February 29, 2012 at 10:50 AM

I don’t think W did all the work for Bin Laden’s death, that stuff is too fluid. But in the general working of the military actions, Obama stuck with what was already in place.

Cindy Munford on February 29, 2012 at 10:56 AM

Since when is inventory growth after Christmas a good thing?

This means that nothing sold during the Christmas season.

faraway on February 29, 2012 at 10:54 AM
—-

2011 Xmas retail sales up 3.8% over 2010

Online sales up %15

Oh no

Doesn’t fit the narrative

Dave Rywall on February 29, 2012 at 10:58 AM

This can probably all be explained by panic buying of survival gear, weapons, and ammo in anticipation of the Obamination losing and going totally scorched earth on America.

CorporatePiggy on February 29, 2012 at 10:58 AM

haha, we are all Preppers now.

faraway on February 29, 2012 at 10:59 AM

STOP LISTENING TO THE LIMBAUGH’S AND LEVIN’S and PALIN’S!!! THINK FOR YOURSELF!!!!

tpw on February 29, 2012 at 10:03 AM

I’ll listen to whoever I want, and I’ll still think for myself. I value Rush, Levin, Palin, and even Allahpundit’s opinions. And yet I’m still not a Romney hater.

I don’t know where the “Romney is a socialist”, “Moromons believe…” “…magic underwear…” stuff comes from but its classless and doesn’t come from the names you mentioned. And I’m a Newt supporter.

bernverdnardo1 on February 29, 2012 at 11:00 AM

Online sales up %15

Oh no

Doesn’t fit the narrative

Dave Rywall on February 29, 2012 at 10:58 AM

Stockpiling beans and rice isn’t growth

faraway on February 29, 2012 at 11:00 AM

The administration is going to cook the books and the media is going to dutifully report. Then Romney’s only selling point is going to be mooted, but the media is going to ensure that Romney is crushed by piling on him like he has done to his GOP opponents (see, e.g., the recent WaPo article about Romney’s Mormonism).

besser tot als rot on February 29, 2012 at 11:00 AM

Stockpiling beans and rice isn’t growth

faraway on February 29, 2012 at 11:00 AM
—–
The clown posted that nothing was sold, implying that Xmas retail sales were poor.

They were not poor.

You may put your head back in the sand now.

Dave Rywall on February 29, 2012 at 11:05 AM

“Thank you Mr. president!”
-crr6
Meat Fighter on February 29, 2012 at 9:22 AM

Incidentally, I believe ‘crr6′ has been reincarnated as ‘liberal4life’.

Dr. Carlo Lombardi on February 29, 2012 at 11:14 AM

If you spent 50% more than you made and achieved 3% growth, did you really grow at all?

lorien1973 on February 29, 2012 at 11:14 AM

It will take a while to fix this stuff. It took 8 years of Bush policies for us to get here. Obama can’t fix it over night

liberal4life on February 29, 2012 at 9:35 AM

not quite. It took two years of a democratic congress and electing the worst president in US history to get us here. It’ll take decades to dig out now.

Fighton03 on February 29, 2012 at 11:21 AM

If you spent 50% more than you made and achieved 3% growth, did you really grow at all?

lorien1973 on February 29, 2012 at 11:14 AM

Completely irrelevant. Most people are paying attention only to the top line number (if that). They will think that Obamanomics is finally working. Romney will have nothing to run on and will get destroyed, taking the House and Senate opportunity down with him.

(The media is carrying his water on these lame distinctions between Romneycare and Obamacare for nwo, but in the general, expect they to reiterate ad naseum how they are both the same.)

besser tot als rot on February 29, 2012 at 11:23 AM

It’ll take decades to dig out now.

Fighton03 on February 29, 2012 at 11:21 AM

Good thing we’re nominating a guy with big ideas for reforming the federal government mess, rather than someone who likes quick fixes to make things look good while in office, but are time bombs for when he leaves office. What? Oh, wait. That’s right. We’re nominating Romney. Never mind.

besser tot als rot on February 29, 2012 at 11:25 AM

People who don’t like Obama can suck it up or continue the “Bush did all the work” bullsh*t.

Dave Rywall on February 29, 2012 at 10:50 AM

The drooling isn’t very becoming.

You know, chumplett. You might be a wee bit more convincing, if you just pretend you’re an Ivy League Poli Sci graduate, and tell us that you just know that inventory will be snapped up, as gas surges past $4 per gallon.

Just suggestin’

MNHawk on February 29, 2012 at 11:26 AM

Most of this growth was due to the increase use of revolving credit. There was no real growth in the economy. And just like any credit bubble it can burst.

Oil Can on February 29, 2012 at 11:26 AM

liberal4life on February 29, 2012 at 9:27 AM

KeninCT on February 29, 2012 at 9:29 AM
This could be a fun thread. :-)

Double the tards, double the fun!

MNHawk on February 29, 2012 at 9:59 AM

They are both possessed by retarded ghosts!

KOOLAID2 on February 29, 2012 at 11:27 AM

If McCain were prez you’d be saying this bullsh*t? Rigghhhht.

Dave Rywall on February 29, 2012 at 9:48 AM

lose an argument…change the subject.

Fighton03 on February 29, 2012 at 11:27 AM

That’s right. We’re nominating Romney. Never mind.

besser tot als rot on February 29, 2012 at 11:25 AM

ugh….you’d think the gop would’ve figured out there’s an election coming and actually had some candidates ready.

Fighton03 on February 29, 2012 at 11:33 AM

The administration is going to cook the books and the media is going to dutifully report.

Yes. And here we are analyzing a bogus number based on government spending like its some kind of economic indicator. Like the unemployment number, where individuals arbitrarily culled from the result are conflated by lib4life and others as “people getting back to work”. And we’ll all be analyzing that BS in a few days.

Lets talk about profits, income, and tax revenue, not GDP. Lets talk about labor force participation, not “unemployment”. We have to be retarded to keep playing a game where our opponents can change the rules and revise their score, when there’s plenty of hard data on their failure.

bernverdnardo1 on February 29, 2012 at 11:38 AM

Nice – we got an upgrade! The initial estimate of 2.8% was too low for once. 1Q12 growth should continue, although we’re not sure how much steam the price of oil will take out of the economy. Still, we’ll take 3.0% for 4Q11 – it’s a nice improvement over 3Q11.

We’ll be looking carefully at the 4-week average for first time claims tomorrow and of course the employment report on Friday to possibly pull off a hat trick here. Meanwhile, the markets seem to be taking a breather on the news. May be waiting for Friday.

TouchdownBuddha on February 29, 2012 at 12:09 PM

sigh

bernverdnardo1 on February 29, 2012 at 12:11 PM

I think it’s been known for quite some time that businesses are sitting on their cash. They’re sitting on it because they’re afraid to invest it, not knowing what this administration is going to do next. Inventories may be up, but hiring new employees isn’t. It’s also an election year, and the MFM is out in force to ensure The One is put back in there to finish what he started. Our government is run by the left. They will do whatever is necessary to ensure their livelihood, even slant the figures. Liberals have no shame. Absolutely none.

Ken James on February 29, 2012 at 12:23 PM

The economy was not in crisis when Bush left office the Democrats took over Congress in 2007 right?

liberal4life on February 29, 2012 at 9:39 AM

Isn’t that what you meant to say?

mrsmwp on February 29, 2012 at 12:30 PM

You really do need to see a professional, you know? Anything else you want to throw out there, in order to prove that a GDP number bloated by inventory growth is anything other than a GDP number bloated by inventory growth?

Get help. We really do care.

MNHawk on February 29, 2012 at 10:37 AM

The only thing a troll cares about is seeing themselves quoted. Any normally wired person would read beyond the headline on any topic they cared to comment about. Unless of course they enjoy appearing superficial, and stupid, blindly and happily sucking up the propganda pudding.

Must really suck to be them.

dogsoldier on February 29, 2012 at 1:00 PM

Lets talk about profits, income, and tax revenue, not GDP. …

bernverdnardo1 on February 29, 2012 at 11:38 AM

That would be refreshing, since GDP is calculated with the MASSIVE GUBMINT SPENDING included, of course GDP is up.

If you don’t count all the GUBMINT spending, GDP would be negative.

belad on February 29, 2012 at 1:02 PM

If you don’t count all the GUBMINT spending, GDP would be negative.

belad on February 29, 2012 at 1:02 PM

It might be slightly positive, assuming we could actually collect unbiased, accurate information, but not enough to actually show growth. I suspect somewhere between .2 and .5% is close to the mark.

All of the statistics put out by The Emperor Zero goon squad are lies. All of them.

dogsoldier on February 29, 2012 at 1:07 PM

Oh before I forget, check this link out:

http://theeconomiccollapseblog.com/archives/if-the-economy-is-improving

Pretty damning stuff. You trolls will benefit from that site the most.

And check out shadowstats.com while you’re at it.

dogsoldier on February 29, 2012 at 1:10 PM

Trolls: The x-mas sales were up!!!

Reality: And profit margin didn’t go with the sales. In fact, sales were up only due to steep discounts on merchandise. Ooops.

Hard Right on February 29, 2012 at 1:32 PM

“Thank you Mr. president!”
-crr6
Meat Fighter on February 29, 2012 at 9:22 AM

Incidentally, I believe ‘crr6′ has been reincarnated as ‘liberal4life’.

Dr. Carlo Lombardi on February 29, 2012 at 11:14 AM

I disagree – crr6 at least sounded intelligent at times..

But just in case you’re right……. Parasites!

Chip on February 29, 2012 at 1:50 PM

LIES! DAMN LIES! AND STATISTICS!?! Thank you, Mr. LIAR-In-Chief!?!

Colatteral Damage on February 29, 2012 at 3:44 PM

Of course, rising inventories mean falling future wholesale numbers. The drop in durable goods orders is the most ominous of all the indicators, though: you can’t really grow without those being robust.

Adjoran on February 29, 2012 at 3:57 PM

Most of the growth occurred in inventory expansion, although real final sales improved slightly from the first report:

Sales to whom?

Dr. ZhivBlago on February 29, 2012 at 4:19 PM

Online sales up %15

That’s me!!! I got that Nordicware microwave egg boiler thing (works great though awkward to open after) and that microwave pasta boat thingy (works great but spaghetti sticks to itself unless you stir it).

Oh, and new cable modem, a router, and a USB wireless adapter for my old Vista pc and hooked everything up myself. Works great. Not bad for a 68 year old. :)

MaggiePoo on February 29, 2012 at 5:45 PM

Comment pages: 1 2