Q4 GDP rose 5.7%, better than expectations of 4.7% but nominal GDP was only .3% above estimates as the price deflator rose only .6%, .7% less than expected. Nominal GDP rose 6.3% vs estimates of 6%. Personal Spending rose 2%, .2% above forecasts. Inventories fell by only $33.5b, down from the $139b drop in Q3 and $160b fall in Q2. This added 3.4% to GDP. Real final sales rose by 2.2% and takes out the impact of inventories. Spending on equipment and software rose by 13.3% and added .8% to GDP. Spending on residential construction rose by 5.7%, the 2nd q in a row of gains but nonresidential structures fell by 15.4%. Trade added .5% to GDP as exports rose 18.1% while imports were up just 10.5%. Government spending fell by .2% but was led by a 3.5% fall in defense. Nondefense spending rose by 8.1%. Net-net, a great headline print but helped out by lower than expected inflation. The # is old news but in an oversold market, the headline is the focus.

Category: MacroNotes

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