Final Revision of Fourth Quarter GDP Stands at 2.1% Annualized
Final Same Quarter GDP up 2.3% - End of Year GDP at 2.3%, too
The weekly unemployment claims report consumed the headlines at 8:30 AM this Thursday Morning. The Final Read of Fourth Quarter GDP was lost in the shuffle. If it was mentioned it was mentioned as BC, before coronavirus, and dismissed. That is too bad. People will be surprised next month when the BC Q1 GDP report is released.
There are four main components to the GDP. The four main components are the Personal Consumption Expenditures (PCE,) Gross Private Domestic Investments (GPDI,) Government Consumption Expenditures (GCE) and the Import Export data. Sometimes we are firing on all four cylinders and sometime PCE is the cylinder that is firing. Common thinking is that PCE drive 60-70% of GDP. This was very true during fourth quarter and could be true during the first quarter.
The Advance Headline Annualized GDP was reported at 2.1%. This was the fourth straight quarter over 2.0%. Remember that first quarter last year was originally reported at 2.6% before the annual revisions this past Summer. PCE rose 2.1%, GPDI dropped 6.1%, Exports rose 1.4%, Imports dropped 8.7% and GCE rose by 2.7%. The PCE data does not make sense when considering the strong fourth quarter MARTS retail data.
The Preliminary Annualized GDP was also reported at 2.1%. This time the PCE was 2.1%. GPDI was -6.0%, a modest improvement. Exports were reported up 2.0%, up significantly from the advance value of 1.4%, Imports were reported down 8.6%, which should have had a positive impact on GDP. GCE was reported at 2.6%, a very slight decrease from 2.7%.
The "Final" Annualized GDP was also reported at 2.1%. PCE was revised lower (?) to just 1.8%. We had a record retail sales year and the best fourth quarter ever. GPDI was revised up from -6.1% to -6.0%. Imports were revised up from -8.7% to -8.4%. Exports were revised from 1.4% to 2.1%. GCE was revised down from 2.6% to 2.5% during a huge spending period. " say "final" because it could be revised next month with the release of the 2020Q1 Advance GDP report. It will also almost certainly be revised with the release of the 2020 Advance GDP report.
The Advance Same Quarter GDP was reported at 2.3%. The Same Quarter GDP has been over 2.0%, or equal to, since 2016Q4. PCE rose 2.6%, GPDI dropped 1.9%, Exports rose 0.2%, Imports only dropped 2.2%, and GCE rose 3.0%
The Preliminary Same Quarter GDP was reported at 2.3%. PCE was unchanged at 2.6% to 2.1%. GPDI was unchanged at -1.9%. Exports were unchanged at 0.2%. Imports were unchanged at --2.2%. GCE were unchanged at 3.0%
The "Final" Same Quarter to Same Quarter GDP was reported at 2.3%. PCE was revised from 2.6% to 2.7%. GPDI remained at just -1.9% Exports are now at just 0.3%. Imports improved slightly from -2.2% to -2.1%. GCE remained at 3.0%
End of Year GDP remains at 2.3%. The Advance End of the Year GDP was reported at 2.3%, and the Preliminary Annual GDP remained at 2.3%. The "Final" End of Year GDP remains at 2.3%. Remember hat we had an annual rate of growth of 2.2% during 2012, a 1.8% growth rate during 2013 and a 1.6% growth rate during 2016.
Last year we had an anemic 1.1% annualized GDP for the fourth quarter. Originally the annualized rate was 2.6%. This was after a second quarter with an annualized rate over 4% and a third quarter over 3%. This year same quarter GDP bounced up to 2.3%, didn't quite hit 2.5%. The annual rate of growth was modest at 2.3%. We will have to watch the revisions from here on out.
The Legacy Media is (falsely) reporting that we are already in a recession. Funny. I thought a recession was two back to back quarters of negative quarter to quarter growth. We are positive during Q4. They ignored, or dismissed, the strong Retail Sales data released this month, and last month They ignored/dismissed the strong New Home Starts data, this month and last month. They even dismissed this month's February Jobs Report as being a "lagging indicator." They are forgetting the strong January Jobs Report, even after the massive revisions to the 2018 and 2019 data. They ignored the February Existing home Sales data, the best since February 2007. The same goes for the January Existing Home Sales data. They ignored the February New Home Sales data, best since 2007, as BC, before coronavirus.
The early data, two months, is saying that New Home Starts are up 20%% and Completions are virtually unchanged. This should help boost GPDI. The February Retail Data has a growth rate of 6.52% compared to last February which should boost PCE. We have the USMCA, NAFTA 2.0, in place and the China One deal in place. This should reduce the gap between export growth and import growth. That should boost GDP. Democrats are pushing spending bills. That should boost GCE. Next up we will receive the 2020Q1 Advance GDP data.
Combine that to the hoarding mentality of the first few weeks of March and First Quarter could be one of the best we have ever had. The possibility is that we did all of our activity that we would do during four weeks during the first two weeks of March. Construction was probably banging forward. Retail sales will see a massive spike in Grocery, Food and Beverage Store, purchases. Real Estate Construction may continue, depending upon the size of the crews. Real Estate sales should continue through the end of the month. They can manage the number of people in a room at a time.
Second Quarter has not started. If we can get people back to work before Maundy Thursday, April 9th, we can beat some of the deadlines for Jobs and Unemployment Report collection. Many things will show massive contractions due to a fifteen day shutdown. We will still have almost an entire quarter two recover those loses. Some things will not come back. The XFL is pretty much done. Baseball and Basketball may return. People should return to the movies in droves. On-line streaming services will not lose all of their new subscribers. Third Quarter could be the mirror image of Second Quarter. If we drop 24% during the final two weeks of March and April then we could surge 24% during the final two weeks of April and the first two weeks of May.
The reports of the US Economy's demise have been overstated. Businesses are resilient. Some companies are thriving and expanding during the shutdown. More businesses will provide curbside pick-up, deliveries, and carry-out service after the shutdown has ended than were providing those services prior to the shutdown.
Some companies will re-evaluate remote workers. Some companies will downsize their physical footprints while expanding their workforces. This Wuhan Flu Crisis will be a game changer. It will probably change the way we respond to the annual flu, both through prevention and inspired solutions for treatment once infected. It will also create a surge in stockpiling of medical supplies. The negative impacts may be painful now. The recovery may be very enjoyable,
It's the Economy
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