Q4 GDP Revised Lower
The third estimate for fourth quarter GDP showed a slight downward revision to 2.6% (consensus 2.7%) from 2.7% reported in the second estimate. The lowered estimate was owed to downward revisions to exports and consumer spending.
The GDP Price Deflator was left unrevised at 3.9% (consensus 3.9%). The personal consumption expenditures index was left unrevised at 3.7% while the core-PCE Price Index was revised up to 4.4% from 4.3% in the second estimate.
The key takeaway from the report is that it continues pointing to above-potential growth and inflation that remains above target, which the Fed could use as an argument for additional rate hikes.
Personal consumption expenditures increased 1.0% versus the second estimate of 1.4% and added 0.70 percentage points to growth versus 0.93 percentage points in the second estimate. Spending on goods was down 0.1% versus down 0.5% in the second estimate, while spending on services was up 1.6% versus up 2.4% in the second estimate.
Gross private domestic investment increased 4.5% versus 3.7% in the second estimate, adding 0.79 percentage points to GDP growth versus 0.66 percentage points in the second estimate.
Exports decreased 3.7% versus decreasing 1.6% in the second estimate. Imports decreased 5.5% after decreasing 4.2% in the second estimate. Net exports added 0.42 percentage points to GDP growth versus 0.46 percentage points in the second estimate.
Government spending increased 3.6% versus 3.6% in the second estimate, adding 0.65 percentage points to GDP growth versus 0.63 percentage points in the second estimate.
The personal savings rate, as a percentage of disposable personal income, increased to 4.0%, up from 3.9% in the second estimate and 3.2% in the third quarter.
Real final sales of domestic product, which excludes the change in private inventories, decreased to 1.1% from 1.2% in the second estimate.