Q4 Real GDP revised higher but nominal left unchanged

Real Q4 GDP was revised to a better than expected 5.9% from the initial reading of 5.7%. Nominal GDP however was left unch at 6.3%. Helping the real revision was a reduction of .2% in the price deflator, a big boost to spending on equipment and software from an original gain of 13.3% to a revised 18.2% rise. Inventories were also less of a drag than expected as they fell $16.9b from the initial reading of $33.5b, adding .5 of a % pt to the revision. In total for Q4, inventories added 3.9 % pts to GDP, 66% of the gain. Taking out this influence, Real Final Sales were revised down to a gain of 1.9% from 2.2%. The offset to the headline upward change was a reduction to personal spending from 2% to a gain of 1.7%. A higher than expected trade deficit cut estimates by .2% pt. Gov’t Spending was also revised lower led by state and local govt’s. Net-net, the report highlights the huge influence of inventory changes and still sluggish consumer spending but the data is old news with Q1 2/3 over

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