Summary
Despite Wall Street's nonsensical spin to the contrary, today's report from the Commerce Department on fourth-quarter GDP appears to be a decent portrayal of what the economy was doing during the December quarter.
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To get out some hard data for client perusal as quickly as possible, I'm forwarding the following table with little comment. Additional comment/analysis will follow. However, I will say now that the key areas serving to reduce real growth to a 1.1% annual rate during last year's fourth quarter do not appear at all unreasonable.
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ADVANCE ESTIMATE OF FOURTH-QUARTER 2005
REAL GROSS DOMESTIC PRODUCT (Released
01/27 -- Billions of 2000 Chained Dollars
at Seasonally Adjusted Annual Rates)
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4Q2005 3Q2005 Change/ 3Q05F/
Advance Final Impact 2Q05F
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Real GDP 11233.5 11202.3 1.1% 4.1%
Inventory Change 25.7 -13.3 +$39.0 -$11.6
Real Final Sales 11205.0 11214.4 -0.3% 4.6%
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Components of GDP
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Personal Consumption 7930.2 7907.9 1.1% 4.1%
Nonres. Fixed Investment* 1314.2 1305.2 2.8% 8.4%
Resid. Fixed Investment 615.2 610.0 3.5% 7.3%
Net Exports -650.3 -617.5 -$32.8 -$3.3
Government Purchases* 1986.2 1998.1 -2.4% 2.9%
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Implicit Price Deflators:
Gross Domestic Product 3.0% 3.3% -- 3.3%
Gross Domestic Purchases 3.4% 4.2% -- 4.2%
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*MEMO ITEMS
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Government Purchases
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Total 1986.2 1998.1 -2.4% 2.9%
State & Local 1249.8 1248.5 0.4% 0.2%
Federal 736.1 749.5 -7.0% 7.5%
National Defense 486.2 503.6 -13.1% 10.0%
Nonresidential
Fixed Investment
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Total 1314.2 1305.2 2.8% 8.4%
Structures 254.5 254.1 0.6% 2.2%
Equipment & Software 1076.8 1067.5 3.5% 10.6%
Info. Processing
Equip. & Software 613.4 600.2 9.1% 11.1%
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REAL GROSS DOMESTIC PRODUCT (SEASONALLY
ADJUSTED ANNUAL RATES, 2000 CHAINED DOLLARS)
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Year Q1 Q2 Q3 Q4
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2005 3.8% 3.3% 4.1% 1.1%
2004 4.3% 3.5% 4.0% 3.3%
2003 1.7% 3.7% 7.2% 3.6%
2002 2.7% 2.2% 2.4% 0.2%
2001 -0.5% 1.2% -1.4% 1.6%
2000 1.0% 6.4% -0.5% 2.1%
1999 3.4% 3.4% 4.7% 7.3%
1998 4.5% 2.7% 4.7% 6.2%
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