consensus expectations at 3.2% (annualized), but just above our own
forecast for 3.0% growth.
Real consumer spending grew by a strong 4.4% annualized, led by
durable goods spending at 21.6%.
Business investment in equipment in software slowed to 5.8% from
consistent double digit gains over the previous four quarters.
Personal consumption expenditures contributed 3.0 percentage points
(pp) of the total change in GDP, business fixed investment added
0.5pp, and net exports added a whopping 3.4 pp, as exports rose 8.5%
(annualized) and imports fell 13.6%.
The main drag on real GDP growth was business inventories, which
subtracted 3.7 pp. Excluding inventories, real final sales rose by
7.1%, its fastest pace of growth since the second quarter of 1984.
Final domestic demand (excluding net-exports and inventories) rose by
3.4%.
Inflation as measured by the nominal GDP deflator rose by 0.3%
(annualized Q/Q), while PCE inflation rose by 1.8% (annualized Q/Q).
*Key Implications*
At 3.2%, fourth quarter growth is the fastest pace of real GDP growth
that the U.S. economy has seen since the first quarter of 2010. This
renewed vigor is expected to be sustained through much of 2011,
supported by tax cuts and acceleration in job and income growth.
The big story in the fourth quarter was the strong rise in consumer
spending, which accelerated for the fifth straight quarter to its
strongest showing since the first quarter of 2006. Pent-up demand in
combination with an improvement in credit conditions and
near-record-low financing costs should continue to drive strong
durable good sales growth. Even with the rise in vehicle sales in
December, per capita car sales are still more than 30% below their
long-run average, leaving lots of room for outperformance over the
next year.
While investment in equipment and software slowed in the fourth
quarter, this is likely to be a temporary setback. All signs point to
acceleration in investment in the year ahead, including tax
incentives, rising demand, a firmer pricing environment, better
business confidence, and low interest rates.
With domestic demand firming, the one question mark is the export
sector. On the positive side, global growth is likely to continue to
accelerate in the year ahead, driven by emerging markets. However,
this will be tempered by the need to further tighten monetary policy
in emerging markets in order to fend off inflation, and the continued
threat of fiscal crisis in Europe. The outperformance in net-exports
in the fourth quarter is payback for three quarters of negative
contribution. In all likelihood, net-exports will contribute
negligibly to growth over the next year, but as domestic demand moves
to its more traditional role in the driver's seat, it is unlikely to
pose a significant risk to recovery.
Source: ActionForex.Com
No comments:
Post a Comment