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February 26, 2005
Fourth Quarter GDP: The Canadian Mistake (And Others) Gets Fixed
The Bureau of Economic Analysis has now moved on from the "advance" 4th quarter 2004 GDP estimates to the "preliminary" estimates, the first published adjustment since Statistics Canada indicated a slight, uh, miscalculation in their net export figures. Here's the word:
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 3.8 percent in the fourth quarter of 2004, according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.0 percent.
The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.1 percent...
The preliminary estimate of the fourth-quarter increase in real GDP is 0.7 percentage point, or $17.6 billion, higher than the advance estimate issued last month. The upward revision to the percentage change in real GDP primarily reflected upward revisions to exports of goods, to private nonfarm inventory investment, and to equipment and software that were partly offset by an upward revision to imports of goods and a downward revision to personal consumption expenditures for durable goods.
The equipment and software stats caught a few eyes. From Bloomberg:
"Capital expenditures are developing a head of steam,'' said former Fed Governor Lyle Gramley, now an economic adviser at the Stanford Washington Research Group in Washington. "First-quarter GDP is going to be well above 4 percent, maybe 4.5 percent.''...
"When you combine the fourth-quarter revisions with the recent report on capital goods orders, it looks like the economy has some momentum,'' said Ted Wieseman, an economist at Morgan Stanley who today raised his forecast for first quarter growth to 4.1 percent from 3.3 percent. ``There's good reason to believe that not only capital spending but hiring is picking up, and that is going to be a key driver for the economy.''
New Orders for durable goods, excluding transportation equipment, rose 0.8 percent in January, the Commerce Department said yesterday in Washington.
The inflation estimates were revised up a bit too, though:
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.8 percent in the fourth quarter, 0.1 percentage point more than the advance estimate; this index increased 1.9 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.9 percent in the fourth quarter, compared with an increase of 1.7 percent in the third.
UPDATE: Perhaps related to the robust spending on equipment and software is this post by Daniel Drezner. In any event, I've now kept intact my record of linking to everything he posts related to offshoring/homeshoring.
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