Magazine article Economic Trends

Real GDP: Fourth-Quarter 2009 Advance Estimate

Magazine article Economic Trends

Real GDP: Fourth-Quarter 2009 Advance Estimate

Article excerpt

02.08.10

GDP had its strongest quarter in more than six years, coming in above the majority of analysts' estimates at an annualized rate of 5.7 percent for the fourth quarter of 2009. The four-quarter growth rate returned to positive levels for the first time since the third quarter of 2008. The big jump was largely driven by a 3.4 percentage point (pp) increase in private inventories, which happened to be chat component's largest contribution to GDP growth since the first quarter of 1984. Smaller positive contributions also came in from all components except for government spending, and even that negative contribution (-0.02 pp) was minimal. Personal consumption rose another 2.0 percent in the fourth quarter, adding 1.4 pp to real growth. Residential investment grew 5.7 percent this quarter, much less than its third-quarter growth of 18.9 percent, but still contributing 0.1 pp to GDP growth.

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Two interesting developments in the latest release were net exports and business fixed investment (BFI). Exports grew 18.1 percent in the fourth quarter, adding 1.9 pp to real GDP growth and matching their third-quarter performance. This was partially offset by growth in imports of 10.5 percent, but net exports still added 0.5 pp to real growth. BFI also made a positive contribution to GDP despite opposing components. Equipment and software grew at a steady clip of 13.3 percent after having reversed their negative trend last quarter, while structures dropped for the sixth straight quarter, this time by 15.4 percent. On net, BFI added a total of 0.3 pp to GDP.

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The final reading for 2009 real GDP growth was-2.4 percent, slightly ahead of December's Blue Chip consensus forecast. The consensus estimate for 2010 growth ticked up 0.1 pp in January to 2.8 percent, while no quarter in 2010 is currently forecasted to top 3.0 percent. According to forward-looking forecasts, real GDP growth is first expected to reach its long-run trend again in the fourth quarter of 2010. January's survey also started a forecast for 2011 growth and that value came in at 3.1 percent. Overall, these forecasts match the overwhelming concern that a recovery from the current recessio will be a slow one.

Real GDP and Components, 2009:Q4 Advance Estimate

                                            Annualized percent
                                              change, last:

                        Quarterly change    Quarter  Four quarters
                       (billions of 2000$)

Real GDP                      182. … 
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