Q4 GDP MISSES EXPECTATIONS AT 2.8%, PERSONAL CONSUMPTION UP JUST 2.0%

There were high hopes heading into this morning’s Q4 ‘Advance’ GDP report, and though the number was a solid improvement from last quarter’s 1.8% growth, the numbers certainly leave a lot to be desired, especially if you’re bullish.

Headline growth of 2.8% came in below expectations of 3.0%.

Personal consumption growth of 2.0% were below expectations of 2.4%.

The GDP price index only grew by 0.4%, well below expectations of 1.9%.

Again, not a disaster, just disappointing.

Markets have turned notably negative on the news, and the dollar has fallen as well, as the odds of more easing just went up.

The full announcement is here.

Here are some key components from the BEA.

Final sales of computers added 0.18 percentage point to the fourth-quarter change in real GDP
after adding 0.22 percentage point to the third-quarter change.  Motor vehicle output added 0.30
percentage point to the fourth-quarter change in real GDP after adding 0.12 percentage point to the
third-quarter change.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.8 per cent in the fourth quarter, compared with an increase of 2.0 per cent in the third.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.0 per cent in the fourth quarter, compared with an increase of 1.8 per cent in the third.

      Real personal consumption expenditures increased 2.0 per cent in the fourth quarter, compared
with an increase of 1.7 per cent in the third.  Durable goods increased 14.8 per cent, compared with an
increase of 5.7 per cent.  Nondurable goods increased 1.7 per cent, in contrast to a decrease of 0.5
per cent.  Services increased 0.2 per cent, compared with an increase of 1.9 per cent.

      Real nonresidential fixed investment increased 1.7 per cent in the fourth quarter, compared with
an increase of 15.7 per cent in the third.  Nonresidential structures decreased 7.2 per cent, in contrast to an increase of 14.4 per cent.  Equipment and software increased 5.2 per cent, compared with an increase of 16.2 per cent.  Real residential fixed investment increased 10.9 per cent, compared with an increase of 1.3 per cent.

      Real exports of goods and services increased 4.7 per cent in the fourth quarter, the same increase
as in the third.  Real imports of goods and services increased 4.4 per cent in the fourth quarter, compared with an increase of 1.2 per cent in the third.

      Real federal government consumption expenditures and gross investment decreased 7.3 per cent
in the fourth quarter, in contrast to an increase of 2.1 per cent in the third.  National defence decreased 12.5 per cent, in contrast to an increase of 5.0 per cent.  Nondefense increased 4.2 per cent, in contrast to a decrease of 3.8 per cent.  Real state and local government consumption expenditures and gross investment decreased 2.6 per cent, compared with a decrease of 1.6 per cent.

      The change in real private inventories added 1.94 percentage points to the fourth-quarter change
in real GDP after subtracting 1.35 percentage points from the third-quarter change.  Private businesses increased inventories $56.0 billion in the fourth quarter, following a decrease of $2.0 billion in the third quarter and an increase of $39.1 billion in the second.

Meanwhile, the QE3 chatter is set to begin soon, as we explain here, thanks to mediocre inflation.