Today's advance reading on Q4 GDP showed that, so far at least, things in the fourth quarter were not as bad as originally thought. While economists were expecting a decline of 5.5%, the actual number showed a more modest (and manageable) decline of 3.8%. Below we highlight the major categories of the GDP report and their contribution to the headline number. As shown, Government Consumption had the greatest positive impact, while Personal Consumption accounted for the bulk of the declines. While futures have reacted positively to the news, even with the better than expected decline, today's report is still the worst since 1982.
Gov contribution +0.4%, inventory build up +1.3%, so ignoring these contributions we get -3.8% -0.4% -1.3% = -5.5%
It seems that the consensus of -5.4% was pretty close.
Posted by: john east | January 30, 2009 at 09:47 AM
John: Did the economists ignore those contributions to come up with their estimates?
Posted by: Brian C | January 30, 2009 at 02:13 PM
economists were absolutely surprised by the inventories buildup. In fact all economists have taken that as a reason to cut further their initial estimates to Q1 GDP
Posted by: bond trader | February 02, 2009 at 01:05 AM