GDP Revised Up to 5.9% as Inventory Effect Stronger Than Estimated

Data Source: Haver Analytics

GDP revisions for fourth quarter 2009 confirmed that production remained stronger than demand and the inventory effect moved GDP higher to 5.9%.

The initial estimate for GDP growth in the fourth quarter of 2009 showed a surprisingly strong 5.7 percent change from the previous quarter (seasonally adjusted). A decelerating pace for inventory drawdowns contributed in large part to the stronger-than-expected number. The final sales figure – GDP less change in private inventories – also showed strength, however, increasing 2.2 percent over the prior-quarter increase of 1.5 percent.

The GDP figure was revised upward today to 5.9 percent by the Bureau of Economic Analysis at the U.S. Department of Commerce. According to the report, the change is 0.2 percentage point, or $6.1 billion, higher than the advance estimate issued last month, primarily reflecting revisions to “private inventory investment, to exports, and to nonresidential fixed investment that were partly offset by an upward revision to imports and downward revisions to PCE and to state and local government spending.”

Also noteworthy in the report, the final sales figure for domestic product in the fourth quarter was revised downward to 1.9 percent, and the GDP price index was revised down to a 0.4 percent rise, compared to the original estimate of an annualized 0.6 percent.

The final takeaway from the report: During 2009 (that is, measured from the fourth quarter of 2008 to the fourth quarter 2009), real GDP increased 0.1 percent.

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