Financial markets might have been closed in North and South America and in Europe in observance of Good Friday, but somehow that did not keep the Bureau of Economic Analysis (BEA) from releasing its last revision for U.S. gross domestic Product (GDP) for the fourth quarter of 2015.
What had been previously reported as a 1.0% gain was revised higher to 1.4%. Bloomberg was calling for the GDP report to remain static at 1.0%.
The so-called GDP price index, which aims to track prices, was static at 0.9%. Bloomberg had called for the result on prices to remain static at 0.9% as well. Excluding food and energy prices, the core price index for gross domestic purchases increased by 1.0%.
The original uptick had been seen from higher inventories. That made the first quality of GDP rising less than good. This revision was driven up due to higher personal consumption expenditures. This was up 2.4%, a gain of 0.4% from what previously had been counted.
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Current-dollar GDP, which is the value of goods and services produced and then minus the value of the goods and services used up in production, was up by 2.3% (or $104.6 billion) to a level of $18.165 trillion.
Perhaps the real issue is not just what a revision looks like. After all, the data is now almost 90 days old and covers and average of the final quarter of 2015. What matters now is how this sets the stage for the first-quarter GDP.
The Atlanta Federal Reserve’s GDPNow forecast, a model-based projection not subject to judgmental adjustments (and not an official forecast of the Atlanta Fed, its president, the Federal Reserve System, or the FOMC), was last shown to be about 2.0% on the Blue Chip consensus and closer to 1.4% on the GDPNow forecast.
A survey from the Wall Street Journal has an official forecast of 2.1%, on last look, for first-quarter GDP in 2016.
Other GDP data for the fourth quarter of 2015 was seen as follows:
- Real gross domestic purchases, which is a measurement of purchases by U.S. residents of goods and services wherever produced, rose by 1.5% in the fourth quarter.
- Residential fixed investment rose by a sharp 10.1%, but there was a decline of 2.1% in nonresidential fixed investment.
- Net exports trimmed 0.14% off of GDP and inventories cut 0.22% off of GDP.
- Final sales were revised higher by 0.4% to a gain of 1.6%.
As far as what is expected for GDP in the first quarter of 2016, we still have to see more economic reports come out. Whether the low energy prices and the loss of higher-paying energy jobs will play a role remains to be seen, but the sharp rise since the lows of February could play a factor as well. Stay tuned, as the first-quarter GDP will be released in just over a month from now.
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