Q4 GDP Revised to Growth from Contraction, Barely
The first revision to the first-quarter gross domestic product is out. The revision put fourth-quarter GDP up in positive territory, but only at 0.1%. The prior look was in the red at -0.1%. While this is at least positive rather than negative, and while it does keep the growth train officially still on the tracks, Bloomberg and Dow Jones were both calling for a revision to a gain of 0.5% for the fourth quarter. This now puts economic growth at being in a 14-quarter streak.
Today’s report from the Commerce Department also showed that the PCE Price Index was up by 1.5% rather than the 1.2% gain originally reported. Trade accounted for the small recovery in the figure by adding about 0.25% to the report. Federal spending was a big drag, and this was put at -14.8%. Inventories were a drag with the revision growing to -1.55%. Real final sales were up 1.7% in he fourth quarter.
Today’s revision also notes that Superstorm Sandy was a drag on the economy, but it failed to show how much it took out of the GDP report. Investors and the public need to understand that today’s report will do little to create any changes in the no-rate or low-rate policy of the Federal Reserve.
The DJIA is basically flat and is now within about 100 points of its all-time closing high, and the S&P 500 is up by 1 point.