4Q 2010 GDP revised downward

Not so good news this morning. BEA released the second estimate for 4Q GDP — which was revised downward to 2.8%. The first (“advance”) estimate last month was that GDP grew by 3.2% (see earlier posting). According to BEA, the revision “reflected an upward revision to imports and downward revisions to state and local government spending and to personal consumption expenditures (PCE) that were partly offset by an upward revision to exports.”
The new data is disappointing. As I noted last month, economist had expected 3.4% GDP growth for the 4th quarter. And, as the Wall Street Journal notes, “Economists surveyed by Dow Jones Newswires had expected GDP to be revised up to a 3.3% growth rate in the government’s second estimate for the final three months of last year.”
The revisions had a minor impact on one of the concerns I raised last month about the slowing of fixed investment. The revised data shows that investment in equipment and software rose by 5.5% rather than 5.8%. Investment in IT equipment and software grew by 18.8% rather than 20.7% reported earlier and investment specifically in software grew by 5.4% rather than 6%. Investment in transportation equipment dropped by only 8.8% rather than 9.3% and investment in industrial equipment grew by 3.8% rather than 4.2%.
And once again I would point out that the GDP numbers do not offer any guidance on investment in intangibles other than software. So we do not know whether companies have increased their investment in important areas such as human and organizational capital.

One thought on “4Q 2010 GDP revised downward”

  1. 4Q 2010 GDP now set at 3.1%

    Here we go again. BEA released the third estimate for 4Q GDP, revised upward to 3.1%. The second estimate was 2.8%, revised downward from first (“advance”) estimate of 3.2% (see earlier posting). This growth rate is closer to the earlier…


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