2011Q4 GDP final: 3.0%

posted at 9:50 am on March 29, 2012 by Ed Morrissey

The final report on US economic activity in the fourth quarter of last year puts the GDP annualized growth rate at 3.0%, the same as the first revision.  The BEA also reports that the final GDP figure for the year was 1.7%, barely into stagnation territory:

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 “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was also 3.0 percent (see “Revisions” on page 3).

Most of the growth in Q4 came from inventory expansion.  Real final sales of domestic product only hit 1.1% in Q4, a reversal of Q3:

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.

That kind of inventory shift can signal confidence in future growth from retailers and suppliers.  If they guess wrong, however, the excess inventory can depress future orders.  Yesterday, Commerce reported a 2.2% jump in durable-goods orders in February, but that followed a disastrous 4% drop in January.  This quarter seems to indicate that the inventory addition that comprised over half of this growth was a bad bet, and with gas prices rising, we may see inventories expanding from lack of demand again in March and April.

Reuters gives the report a mixed response:

The U.S. economy expanded a bit more slowly than expected in the fourth quarter while personal income grew at a much faster pace than previously thought, which should help underpin spending this quarter.

At the same time, new U.S. claims for unemployment benefits fell to a fresh four-year low last week, according to a government report that showed ongoing healing in the labor market.

Gross domestic product increased at a 3.0 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its final estimate on Thursday, unrevised from last month’s estimate.

That was below most economists’ expectations of 3.2 percent, though some had put the number at 3.0 percent, right on target for the final print. The economy grew at a 1.8 percent rate in the third quarter.

The weekly jobless claims number actually changed very little from the previous few weeks.  It has dropped into a range of 350K-370K this quarter, which is an improvement over last year, but the week-to-week changes have been margin-of-error amounts.  The real test of these measures will be in Q1 and more so in Q2, when rapidly rising gas prices really start biting into the disposable income of Americans.


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Cheer up. In another couple months it’ll be recovery summer … again.

Lost in Jersey on March 29, 2012 at 9:52 AM

Well, I might not be so depressed if I knew the next crop of Obama voters were going to be able to handle this. But I doubt they will.

bloggless on March 29, 2012 at 9:54 AM

Nothing else on the jobless claims, Ed? They revised the week prior by +16,000. This week is reported as -5000 from the revised week prior. Isn’t there a consistent pattern of upward revision?

Two possible headlines:

Jobless claims jump 11k! -or-
Jobless claims once again fall by 5k

The second one wouldn’t be possible without the revision yet last weeks numbers drew great praise for being “the lowest since…” When are we going to get some honesty out of DoL?

BKeyser on March 29, 2012 at 9:57 AM

The real test of these measures will be in Q1 and more so in Q2, when rapidly rising gas prices really start biting into the disposable income of Americans.

It cost me over 60 bucks to fill up my gas tank yesterday. And I drive a Camry, not some giant SUV.

Doughboy on March 29, 2012 at 9:58 AM

We needed a 3.0% for the fourth quarter just to get to 1.8% for the year?

Yeh, let’s vote for Obama because he’ll provide free contraception under legislation that enables his HHS secretary to make it up as she goes along and which is about to crash into Mt. Rushmore. Oh, and let’s vote for Obama because he’s really for same-sex marriage, he’s ready to turn over military secrets to Russia, and he’d have a son who looks like a teenager who got killed by a white-Hispanic, while blacks are killing themselves all over the country in far more startling numbers.

BuckeyeSam on March 29, 2012 at 9:58 AM

You wingnuts are just in heartache mode looking at the awesomeness of my President. Just wait until the greatest President in history’s energy policy comes to full fruition with the shutting down of coal energy. Then our economy will soar. 5-6% a year forever, baby!

MNHawk on March 29, 2012 at 9:59 AM

How many new unemployment claims DO NOT exist because people can NO LONGER file because they have totally exhausted their eligibility?????

Lewfarge on March 29, 2012 at 10:00 AM

“a bit more slowly than expected”

Cut Reuters a break – synonyms for unexpectedly are troublesome

DHChron on March 29, 2012 at 10:00 AM

It cost me $28 to fill the tank of my bike yesterday. $28…thanks PBHO.

Bishop on March 29, 2012 at 10:00 AM

Wasn’t this the same picture last year?

Increased Q4 inventories, with lackluster Real final Sales – while maintaining or increasing an inflated dollar to offset any net gains?

In other words – businesses are in a “net flat or negative” mode – whereas growth and premium price isnt the goal – but the dangerous option: buy up inventory to drive down prices, growth and profit – (quantity play) rather than a quality expansion – which leads to increased revenue, margins and job growth.

Do I blame businesses for staying in business – absolutely not, but as a macro indicator of the National Economy… fluff, bells and whistles.

Odie1941 on March 29, 2012 at 10:01 AM

The real test of these measures will be in Q1 and more so in Q2, when rapidly rising gas prices really start biting into the disposable income of Americans.

Given that Obama has successfully stemmed the rise of the oceans, surely he will be able to stem the rise of gas prices …

ShainS on March 29, 2012 at 10:02 AM

So the annualized GDP growth is 1.7%. How much of it is the national debt, I wonder? It is entirely possible that the actual growth, sans the borrowed money, is well into sub-zero territory.

Archivarix on March 29, 2012 at 10:02 AM

Hooray for mediocrity!

spinach.chin on March 29, 2012 at 10:03 AM

but the week-to-week changes have been margin-of-error amounts

Check out the previous week’s revision, Ed. From a beat of expectations (348 vs. 350) to a large miss of expectations, (364 vs. 350). It’s the name of the game.

Weight of Glory on March 29, 2012 at 10:03 AM

The headline I saw was something like “Jobless claims fall to lowest level since April 2008″

Wigglesworth on March 29, 2012 at 10:05 AM

Nothing else on the jobless claims, Ed? They revised the week prior by +16,000. This week is reported as -5000 from the revised week prior. Isn’t there a consistent pattern of upward revision?

Two possible headlines:

Jobless claims jump 11k! -or-
Jobless claims once again fall by 5k

The second one wouldn’t be possible without the revision yet last weeks numbers drew great praise for being “the lowest since…” When are we going to get some honesty out of DoL?

BKeyser on March 29, 2012 at 9:57 AM

There’s actually two bits of upward revision in intiial jobless claims this week – the weekly one, and an annual upward revision. Tom Blumer over at Bizzy Blog will likely have a better estimation of the latter later today, but a very-quick eyeball is that the annual revision was a rather consistent 8K-20K upward one.

Specificially, initial jobless claims didn’t consistently drop below 400K until the 4th quarter of last year (indeed, it was below 400K only 4 times in the first 3 quarters), and in no point prior to the yet-to-be-revised current number did it drop below 361K (that the week ending 2/11/2012).

Steve Eggleston on March 29, 2012 at 10:07 AM

No surprises here; growth has resumed after the Summer swoon. We will be watching the next employment report carefully. There was a load of good economic news in the 1Q12, and we keep hearing reports of business popping everywhere, so we are expecting 1Q12 GDP to come in above 3.0%.

Markets are settling back – mostly on concerns about a slowdown in China that may begin to impact us later this year – and we remain cautiously optimistic.

TouchdownBuddha on March 29, 2012 at 10:07 AM

Best Buy just announced 400 layoffs and 50 stores closing.

They won’t be able to “spin” those numbers.

gophergirl on March 29, 2012 at 10:07 AM

You wingnuts are just in heartache mode looking at the awesomeness of my President. Just wait until the greatest President in history’s energy policy comes to full fruition with the shutting down of coal energy. Then our economy will soar. 5-6% a year forever, baby!

MNHawk on March 29, 2012 at 9:59 AM

…like JugEars told the Soviets…He has to win his last election!

KOOLAID2 on March 29, 2012 at 10:08 AM

thanks a freakin’ lot Dr Pepper!

DHChron on March 29, 2012 at 10:09 AM

Best Buy just announced 400 layoffs and 50 stores closing.

They won’t be able to “spin” those numbers.

gophergirl on March 29, 2012 at 10:07 AM

…Bain Capitol?…Oh wait! No never mind!

KOOLAID2 on March 29, 2012 at 10:09 AM

Nothing else on the jobless claims, Ed? They revised the week prior by +16,000. This week is reported as -5000 from the revised week prior. Isn’t there a consistent pattern of upward revision?

BKeyser on March 29, 2012 at 9:57 AM

No. The revisions go both ways, but overall they have been revised to be slightly better after the initial reports, not worse.

See here: http://www.bls.gov/web/empsit/cesnaicsrev.htm. The average revision has been very slightly towards better employment in 2011, 2010, and 2009. And the same pattern generally held in previous years as well.

tneloms on March 29, 2012 at 10:10 AM

You wingnuts are just in heartache mode looking at the awesomeness of my President. Just wait until the greatest President in history’s energy policy comes to full fruition with the shutting down of coal energy. Then our economy will soar. 5-6% a year forever, baby!

MNHawk on March 29, 2012 at 9:59 AM

Heh. Who knew that when Bill Clinton famously proclaimed in 2000 that it was “the end of the business cycle” that he’d be proven right a decade later — just not exactly in the way he envisioned …

ShainS on March 29, 2012 at 10:10 AM

Wonder what inflation rate they used in the calculation? Last time they seriously understated it to get the growth nuber up to 3% – bet they did the same thing this time.

tommyboy on March 29, 2012 at 10:10 AM

The headline I saw was something like “Jobless claims fall to lowest level since April 2008″

Wigglesworth on March 29, 2012 at 10:05 AM

Technically true, but unlike 2008, when there were also only 2.96 million continuing claims and 133.4 million covered employed, there were roughly 3.3 million continuing claims and 126.6 million covered employed.

Steve Eggleston on March 29, 2012 at 10:11 AM

Is it bad when they have to cook the books just to get it up to 3%?

DHChron on March 29, 2012 at 10:12 AM

More troubling is that 78K people fell of extended and EUC claims as more and more drop out of the workforce. This means the unemployment rate just dropped courtesy of even more people giving up on finding work. Thank heavens for BLS math. In other news, the final Q4 GDP revision came unchanged at 3.0%, in line with expectations. There were no major changes to the components, however Personal consumption did decline modestly from the second revision’s 1.52% to 1.47%. It also appears that the government has been consistently taking away less and less from “growth”, detracting 0.93%, 0.89% and 0.84% with every consecutive revision. Overall, a wash, meaning March is about to close with about with 17 misses out of 19 key economic indicators.

Posting this stuff is almost comical, Ed. No one’s even paying attention to Europe anymore as it it implodes. Bank runs in Greece, Spain debt double gov’t reports and tanker strikes in the UK. All~in~all a rosy picture….lol

DevilsPrinciple on March 29, 2012 at 10:13 AM

Best Buy just announced 400 layoffs and 50 stores closing.

They won’t be able to “spin” those numbers.

gophergirl on March 29, 2012 at 10:07 AM

That’s too bad for the people, but I won’t miss shopping there.

Bishop on March 29, 2012 at 10:13 AM

It was all debt fueled, it was wasn’t real growth. If fact, now we have more household debt.

Oil Can on March 29, 2012 at 10:15 AM

More troubling is that 78K people fell of extended and EUC claims as more and more drop out of the workforce. This means the unemployment rate just dropped courtesy of even more people giving up on finding work. Thank heavens for BLS math.

DevilsPrinciple on March 29, 2012 at 10:13 AM

Actually, that’s a function of the 99-week extended unemployment getting cut to 72 weeks.

Steve Eggleston on March 29, 2012 at 10:15 AM

Should be any time now that libtard4life will be coming around to name you enemies of the state and reporting you to the truth team for rooting for a bad economy. I wish I could put a sarc tag on that but I can’t.

bbinfl on March 29, 2012 at 10:16 AM

Anyone rooting speaking of a bad economy is an enemy of the state…

Lanceman on March 29, 2012 at 10:17 AM

dissent is patriotic is punishable by death…off with their anti-science heads

DHChron on March 29, 2012 at 10:20 AM

tneloms on March 29, 2012 at 10:10 AM

Different set of numbers, actually.

Steve Eggleston on March 29, 2012 at 10:20 AM

Best Buy just announced 400 layoffs and 50 stores closing.

They won’t be able to “spin” those numbers.

gophergirl on March 29, 2012 at 10:07 AM

How can they close 50 stores and only lay off 400 workers? That’s 8 workers per store and that ratio can’t be accurate. Unless they’re transferring some of those leftover employees from the defunct stores to ones that are still open.

Regardless, Worst Buy had it coming. Their customer service is awful, their overhead has to be really high given the far better prices that can be found online, and frankly they haven’t had any good deals since the holidays.

Doughboy on March 29, 2012 at 10:23 AM

zerohedge ‏ @zerohedge

ITALY CAR SALES DOWN ABOUT 32% IN MARCH, DEALER GROUP SAYS – uberbullish

The world economy is not growing. It’s just BS.

Oil Can on March 29, 2012 at 10:25 AM

That kind of inventory shift can signal confidence in future growth from retailers and suppliers.

Early anticipation of November election results, maybe?

Difficultas_Est_Imperium on March 29, 2012 at 10:30 AM

Do I blame businesses for staying in business – absolutely not, but as a macro indicator of the National Economy… fluff, bells and whistles.

Odie1941 on March 29, 2012 at 10:01 AM

Excellent analysis!

belad on March 29, 2012 at 10:34 AM

Best Buy just announced 400 layoffs and 50 stores closing.

They won’t be able to “spin” those numbers.

gophergirl on March 29, 2012 at 10:07 AM

“AP – In other news today, Best Buy just announced its new unpaid vacation policy for hundreds of workers, creatively financed by contributions to various state unemployment funds. The hundreds of workers could not be reached for comment. When asked, WH spokesman Jay Carney said that if Zero had a business, it would look just like American Motors.”

MrKleenexMuscles on March 29, 2012 at 10:40 AM

Different set of numbers, actually.

Steve Eggleston on March 29, 2012 at 10:20 AM

True, but they don’t have a nice table of the revisions for the UI claims. Either way, it illustrates that the DOL isn’t constantly painting a rosy general picture initially, only to revise the numbers later to a worse value.

tneloms on March 29, 2012 at 10:43 AM

No surprises here; growth has resumed after the Summer swoon. We will be watching the next employment report carefully. There was a load of good economic news in the 1Q12, and we keep hearing reports of business popping everywhere, so we are expecting 1Q12 GDP to come in above 3.0%.

Markets are settling back – mostly on concerns about a slowdown in China that may begin to impact us later this year – and we remain cautiously optimistic.

TouchdownBuddha on March 29, 2012 at 10:07 AM

Your assessment seems to contradict facts. But good try.

goflyers on March 29, 2012 at 10:52 AM

Seriously, does anyone even believe the 3% number? They cook the books on everything else.

Mr Galt on March 29, 2012 at 10:54 AM

Last week’s revision up by 16K claims just so the MSM media can report the revised data as “declining” from 364K to 359K. In the meantime, expectations were 350K and 350K. Both missed.

The above quote from another blog is right on the money.

Wigglesworth on March 29, 2012 at 10:59 AM

Wow, 3.0%. I’m impressed, sort of like how I’d be impressed if a horse could get up to 3 mph despite hauling a wagon filled with 120 tons of bound regulations.

JeremiahJohnson on March 29, 2012 at 11:02 AM

The weekly jobless claims number actually changed very little from the previous few weeks. It has dropped into a range of 350K-370K this quarter, which is an improvement over last year, but the week-to-week changes have been margin-of-error amounts.

A number of companies in Mass laid off this past week, and there are plans to do so again in April.

dogsoldier on March 29, 2012 at 11:09 AM

Completely unscientific on my part, but it just seems that, where the numbers were coming in above expectations a couple of months ago, they’re now falling below:

http://www.kansascityfed.org/publicat/research/indicatorsdata/mfg/pdf/2012Mar29mfg.pdf

bobs1196 on March 29, 2012 at 11:18 AM

A number of companies in Mass laid off this past week, and there are plans to do so again in April.

dogsoldier on March 29, 2012 at 11:09 AM

Meanwhile, 183 new jobs will be coming to Spaulding Clinical Research in West Bend, Wisconsin. Unionistas, Democrats (though I repeat myself) hardest hit.

Steve Eggleston on March 29, 2012 at 11:30 AM

Meanwhile, 183 new jobs will be coming to Spaulding Clinical Research in West Bend, Wisconsin. Unionistas, Democrats (though I repeat myself) hardest hit.

Steve Eggleston on March 29, 2012 at 11:30 AM

That is good news. As I often remind the libtrolls I wish it was much much higher.

dogsoldier on March 29, 2012 at 1:46 PM

So the annualized GDP growth is 1.7%. How much of it is the national debt, I wonder? It is entirely possible that the actual growth, sans the borrowed money, is well into sub-zero territory.

Archivarix on March 29, 2012 at 10:02 AM

Archi, you are tight!

This is WITH 1.6 Trillion of Debt fueled government deficit/year, and a total Fed Budget of 3.6-3.8 Trillion

How bad would these numbers be just with 2008′s fed Gov Budget!

wow!

jean

Gauthijm on March 29, 2012 at 2:17 PM

err Right

No edit buddton. doh
J

Gauthijm on March 29, 2012 at 2:17 PM

A 3.0 percent growth rate in GDP is commonly looked upon as the break-even point. That is, it’s enough growth to absorb any natural increase in the number of new people entering the job market but it’s not enough to start lowering the unemployment rate. So far, the only way the jobless rate will drop this summer is if more people get discouraged.

It will be very interesting to see what the GDP numbers are for Q1. If it’s over 3.0 all we’ll heard for the next 6 months is “Recovery Summer is back!”

Fred 2 on March 30, 2012 at 3:07 AM