It beats contraction, which was the result of the initial estimate a month ago, but not by much. The Commerce Department’s estimate of fourth-quarter economic growth improved to 0.1%, a rise of only two-tenths of a point, in the routine second iteration:
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 0.1 percent in the fourth quarter of 2012 (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 3.1 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, real GDP declined 0.1 percent. The upward revision to the percent change in real GDP is smaller than the average revision from the advance to second estimate of 0.5 percentage point. While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month (for more information, see “Revisions” on page 3).
I’m actually a little surprised that it didn’t go up more. Later economic indicator reports for December made it seem that the initial estimate would get a substantial upward revision. The key indicator of real final sales of domestic product rose more significantly, from 1.1% in the initial estimate to 1.7% in today’s report. That’s not a robust number either, but the increase there with a lack of overall increase says that inventory depletion must have taken a bigger bite than first thought.
Reuters’ economists are less than impressed, too:
Gross domestic product expanded at a 0.1 percent annual rate, the Commerce Department said on Thursday, missing the 0.5 percent gain forecast by analysts in a Reuters poll.
The growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.
However, much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter.
Consumer spending was more robust by comparison, although it only expanded at a 2.1 percent annual rate.
Bear in mind that Q4 was the Christmas season, and one would expect consumer spending to perk up. This is still an indicator that the economy remains moribund, and one would expect that the final estimate won’t change much from here. The only bright spots — real final sales and consumer spending — are still in the 10-watt range.