Q4 GDP Lacks Major Recovery

The Commerce Department has released the fourth quarter of 2010 figures for Gross Domestic Product, or Gross National Product as it used to be called.  GDP came in on a headline figure at +3.2% versus a multi-source consensus of +3.5% that had been expected.  The discrepancy may be simply that estimates had risen too much over the last two or three weeks.  These gains are going to be considered light and not exactly representative of robust nor as being full of overheating growth.

Q3 Final GDP was +2.6% versus +1.7% for Q2.  The PCE Price Index for personal consumption expenditures showed a reading of only +0.4% outside of food and energy as the preliminary data for the fourth quarter.  That figure for PCE is what the Federal Reserve looks at for an inflation bogey, and that was down slightly from +0.5% in the third quarter.  The headline PCE level was +1.8% if you include the other sectors.

The consumer spending portion is roughly 70% of GDP and that figure actually came in at a level of +4.4%.  Employment costs were up a mere +0.4% in the fourth quarter.

The recovery continues… at least for about 90% of America.

JON C. OGG