Earlier today, the Commerce Department released its preliminary estimate
of fourth-quarter 2003 gross domestic product. Commerce reported that real
GDP expanded at an annual rate of 4.1% during the quarter, versus the 4.0% rate
reported in its advance estimate, released on 1/30. During last year's third
quarter, GDP rose at an 8.2% annual rate.
The three-month period ended December was the ninth consecutive quarter
of reported real growth, with the Commerce Department's 4.1% preliminary
estimate coming in somewhat better than the consensus forecast, which was 3.8%, give
or take.
In comparing the preliminary fourth-quarter numbers with the Commerce
Department's final estimate for the third quarter, real GDP was up $106.1 billion
or about 1.011%. Add one, then raise this to the fourth power, and you get
the rounded annual rate of change of 4.1%.
Versus 2002's fourth quarter, real GDP was up $438.4 billion, or 4.3%.
The respective numbers: 4Q2003 = $10599.2 billion; 4Q2002 = $10160.8 billion.
The areas contributing to higher growth in the preliminary versus advance
reports, in order of their dollar contribution, were: (1) inventory change
($8.8 billion), (2) nonresidential fixed investment (capital spending, $7.2
billion), (3) personal consumption expenditures ($2.7 billion), and (4) government
spending ($0.1 billion).
The areas contributing to lower growth in the preliminary versus advance
reports were: (1) net exports (minus $13.7 billion) and (2) residential fixed
investment (housing, minus $2.3 billion).
Looking at the fourth-quarter preliminary estimate versus the final
estimate for last year's third quarter, inventory rebuilding accounted for a very
substantial $24.0 billion or 22.6% of the fourth quarter's total $106.1 billion
growth in real GDP.
According to the Commerce Department, there were slight downward
revisions to the key GDP inflation measures in the latest report, which helped a bit
more in translating nominal GDP gains into real ones.
The following table breaks out in greater detail the numbers discussed
above.
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PRELIMINARY ESTIMATE OF FOURTH-QUARTER 2003
REAL GROSS DOMESTIC PRODUCT (Released
02/27 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
--------------------------------------------------
4Q2003 3Q2003 Change/
Prelim. Final Impact
------------------------
Real GDP 10599.2 10493.1 +4.1%
Inventory Change +14.9 -9.1 +$24.0
Real Final Sales 10580.0 10497.7 +3.2%
--------------------------------------------------
Components of GDP
-----------------
Personal Consumption 7476.9 7426.6 +2.7%
Nonres. Fixed Investment* 1165.9 1139.5 +9.6%
Resid. Fixed Investment 527.5 516.7 +8.6%
Net Exports -514.4 -505.2 -$9.2
Government Purchases* 1915.1 1911.1 +0.8%
--------------------------------------------------
Implicit Price Deflators:
Gross Domestic Product 1.2% 1.6% --
Gross Domestic Purchases 0.7% 1.8% --
--------------------------------------------------
*MEMO ITEMS
-----------
Government Purchases
--------------------
Total 1915.1 1911.1 +0.8%
State & Local 1198.6 1197.4 +0.4%
Federal 717.1 714.3 +1.6%
National Defense 476.1 471.2 +4.2%
Nonresidential
Fixed Investment
----------------
Total 1165.9 1139.5 +9.6%
Structures 233.4 237.7 -7.0%
Equipment & Software 940.1 907.7 +15.1%
Info. Processing
Equip. & Software 559.4 537.7 +17.1%
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MAJOR GDP COMPONENTS -- CHANGES BETWEEN
"PRELIMINARY" AND "ADVANCE" 4Q2003 ESTIMATES
(Billions of 2000 Chained Dollars at
Seasonally Adjusted Annual Rates)
---------------------------------------------------
4Q2003 4Q2003
Prelim. Advance Change
----------------------------
Real GDP 10599.2 10597.1 +2.1
Inventory Change +14.9 +6.1 +8.8
Real Final Sales 10580.0 10585.9 -5.9
---------------------------------------------------
Personal Consumption 7476.9 7474.2 +2.7
Nones. Fixed Invest. 1165.9 1158.7 +7.2
Resid. Fixed Invest. 527.5 529.8 -2.3
Net Exports -514.4 -500.7 -13.7
Govt. Purchases 1915.1 1915.0 +0.1
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REAL GROSS DOMESTIC PRODUCT (SEASONALLY
ADJUSTED ANNUAL RATES, 2000 CHAINED DOLLARS)
Year Q1 Q2 Q3 Q4
----------------------------------------
2003 2.0% 3.1% 8.2% 4.1%
2002 4.7% 1.9% 3.4% 1.3%
2001 -0.2% -0.6% -1.3% 2.0%
2000 1.0% 6.4% -0.5% 2.1%
1999 3.4% 3.4% 4.8% 7.3%
1998 4.5% 2.7% 4.7% 6.2%
----------------------------------------
MEMO ITEM: Annual change in real GDP
before and after the "comprehensive
revision" published by the Commerce
Department on 12/10/03.
----------------------------------------
1929-2002 1959-1992 1992-2002
---------------------------------
After 3.4% 3.4% 3.2%
Before 3.4% 3.4% 3.2%
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