GDP Q4 Third Estimate at 2.6%,
Up from the 2.4% Second Estimate

By Doug Short
March 27, 2014

 Print Page    Email Article    

Bookmark and Share

The Third Estimate for Q4 GDP, to one decimal, came in at 2.6 percent, up from 2.4 percent in the Second Estimate. The GDP deflator used to calculate real (inflation-adjusted) GDP remained unchanged at 1.6 percent. had forecast 2.7 percent for today's GDP estimate and the deflator to remain unchanged.

Here is an excerpt from the Bureau of Economic Analysis news release:

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 2.6 percent in the fourth quarter of 2013 (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 4.1 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 2.4 percent. With this third estimate for the fourth quarter, the general picture of economic growth remains largely the same; personal consumption expenditures (PCE) was larger than previously estimated, while private investment in inventories and in intellectual property products were smaller than previously estimated (see "Revisions" on page 3).

The increase in real GDP in the fourth quarter primarily reflected positive contributions from PCE, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment, a larger decrease in federal government spending, a downturn in residential fixed investment, and a deceleration in state and local government spending that were partly offset by accelerations in PCE and in exports, a deceleration in imports, and an acceleration in nonresidential fixed investment. [Full Release]

Here is a look at GDP since Q2 1947 together with the real (inflation-adjusted) S&P Composite. The start date is when the BEA began reporting GDP on a quarterly basis. Prior to 1947, GDP was reported annually. To be more precise, what the lower half of the chart shows is the percent change from the preceding period in Real (inflation-adjusted) Gross Domestic Product. I've also included recessions, which are determined by the National Bureau of Economic Research (NBER).



Here is a close-up of GDP alone with a line to illustrate the 3.3 average (arithmetic mean) for the quarterly series since the 1947. I've also plotted the 10-year moving average, currently at 1.7. The current GDP is now just above the half-way point between its 10-year moving average and its long-term average.



Here is the same chart with a linear regression that illustrates the gradual decline in GDP over this timeframe.



Perhaps the most telling representation of slowing growth in the US economy is the year-over-year rate of change. The latest data point at 2.59 percent is off its interim low of 1.32 percent in Q1 of last year.



And for a bit of political trivia, here is a look at GDP by party in control of the White House and Congress.



In summary, the Q4 GDP Third Estimate of 2.6 percent was in the general ballbark for most forecasts. But the third estimate for the preceding quarter is by definition a refined look at the rear view mirror. More interesting will be next month's first look at Q1 of this year.





Print Page    Email Article
Remember, if you have a question or comment, send it to .
Website by the Boston Web Company