Earlier today, the Commerce Department released its advance estimate of
fourth-quarter 2003 GDP. Commerce reported that real gross domestic product
grew at an annual rate of 4.0% during the quarter. During last year's third
quarter, GDP expanded at a 8.2% annual rate.
The three-month period ended December was the ninth consecutive quarter
of reported real growth. However, the Commerce Department's 4.0% advance
estimate was noticeably below the consensus forecast, which centered around 5%.
In comparing the advance fourth-quarter numbers with the Commerce
Department's final estimate for the third quarter, real GDP was up $104.0 billion or
about 0.991%. Add one, then raise this to the fourth power, and you get the
rounded annual rate of change of 4.0%.
Versus 2002's fourth quarter, real GDP was up $436.3 billion, or 4.3%.
The respective numbers: 4Q2003 = $10597.1 billion; 4Q2002 = $10160.8 billion.
There were no major areas showing lower growth in the fourth quarter
versus the third. Contributions to higher quarter-over-quarter growth, in order
of respective dollar contribution, were: (1) personal consumption expenditures
($47.6 billion), (2) nonresidential fixed investment (capital spending, $19.2
billion), (3) inventory change ($15.2 billion), (4) residential fixed
investment (housing, $13.1 billion), (5) net exports ($4.5 billion), and (6)
government spending ($3.9 billion).
As the above results indicate, inventory rebuilding accounted for a
substantial $15.2 billion or 14.6% of the quarter's total $104 billion growth in
real GDP.
According to the Commerce Department, there was a significant decline in
the key GDP inflation measures during the fourth quarter, which helped
translate nominal GDP gains into real ones. The reported results look overstated on
the downside to me.
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ADVANCE ESTIMATE OF FOURTH-QUARTER 2003
REAL GROSS DOMESTIC PRODUCT (Released
01/30 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
--------------------------------------------------
4Q2003 3Q2003 Change/
Advance Final Impact
------------------------
Real GDP 10597.1 10493.1 +4.0%
Inventory Change +6.1 -9.1 +$15.2
Real Final Sales 10585.9 10497.7 +3.4%
--------------------------------------------------
Components of GDP
-----------------
Personal Consumption 7474.2 7426.6 +2.6%
Nonres. Fixed Investment* 1158.7 1139.5 +6.9%
Resid. Fixed Investment 529.8 516.7 +10.5%
Net Exports -500.7 -505.2 +$4.5
Government Purchases* 1915.0 1911.1 +0.8%
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Implicit Price Deflators:
Gross Domestic Product 1.1% 1.6% --
Gross Domestic Purchases 0.6% 1.8% --
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*MEMO ITEMS
-----------
Government Purchases
--------------------
State & Local 1200.2 1197.4 +0.9%
Federal 715.4 714.3 +0.6%
National Defense 473.4 471.2 +1.9%
Nonresidential
Fixed Investment
----------------
Total 1158.7 1139.5 +6.9%
Structures 235.9 237.7 -3.0%
Equipment & Software 929.6 907.7 +10.0%
Info. Processing
Equip. & Software 557.1 537.7 +15.2%
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MAJOR GDP COMPONENTS -- CHANGES BETWEEN
"ADVANCE" 4Q2003 AND "FINAL" 3Q2003 ESTIMATES
(Billions of 2000 Chained Dollars at
Seasonally Adjusted Annual Rates)
---------------------------------------------------
3Q2003 3Q2003
Advance Final Change
----------------------------
Real GDP 10597.1 10493.1 +104.0
Inventory Change +6.1 -9.1 +15.2
Real Final Sales 10585.9 10497.7 +88.2
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Personal Consumption 7474.2 7426.6 +47.6
Nones. Fixed Invest. 1158.7 1139.5 +19.2
Resid. Fixed Invest. 529.8 516.7 +13.1
Net Exports -500.7 -505.2 +4.5
Govt. Purchases 1915.0 1911.1 +3.9
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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% 4.0%
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%
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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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