Data Release: Headline disappointment masks solid details for Q4 GDP
- U.S. real GDP grew by 1.9% (annualized) in the fourth quarter according to the advance estimate, falling short of the median consensus estimate of 2.2%.
- U.S. consumers, however, did not disappoint. Spending grew 2.5% (matching the median forecast for 2.5%), as spending on durable goods poster a third consecutive stellar quarter (10.9%). Spending on services was relatively weak, advancing only 1.3%, which was in part due to unseasonably warm weather depressing utility consumption.
- Non-residential business investment accelerated in the fourth quarter. Total business spending grew 2.4%, as spending on equipment investment (3.1%) and intellectual property (+6.4%) outweighed a drop in structures (-5.0%).
- Residential investment was also up a hearty 10.2%, after declining in the previous two quarters.
- As expected, net-exports exerted a considerable drag on growth in the fourth quarter. Exports fell 4.3%, after jumping 10% in the third quarter, on a one time surge in soybean exports. More surprising was the 8.3% surge in imports. In total, net exports subtracted 1.7%-points from growth, after adding 0.9%-points in the third quarter.
- Inventory investment was another big contributor to the headline, adding 1.0%-point.