Highlights of the Q4 GDP report

The GDP advanced report comes in weaker than expected at 2.6% vs 3.0% expected.

  • The 3Q came in at 3.2%
  • The highlights of the 3Q report here
  • Personal consumption 3.8% vs 3.7% expected
  • Prior personal consumption 2.2%
  • GDP price index 2.4% versus 2.3%. Prior quarter 2.1%
  • Core PC 1.9% versus 1.9% expected prior 1.3%
  • Real final sales 3.2% vs 2.4% in Q3

Other details:

  • Business inventories cut -0.67% from the GDP change
  • Exports you +6.9% (vs 2.3% in Q3).
  • Import +13.9% (vs -0.7% last quarter)
  • Home investment 11.6% (prior -4.7%). Business investment in structures +1.4% (Q3 -7.0%).
  • Total business investment +6.8% (vs 4.7% 3Q). Equipment +11.4% (Q3 +10.8%); intellectual property/software +4.5% (Q3 +5.2%)
  • Ex Auto GDP 1.8% vs 3.6% in Q3

Contributions to the 2.6% GDP

  • Personal consumption 2.58% (versus 1.4% last)
  • investment +0.6% (vs +1.19% last). Inventories subtracted -0.67%
  • net exports -1.13% (versus +0.36% last)
  • Govt consumption 0.50% (vs +0.12% last)

The number was influenced by the cut in inventories (-0.67% drain). Net exports - a Trump focus now - subtracted -1.13%. On the positive side, the consumer is confident with a strong 2.6% contribution in the 4Q vs 1.49% in 3Q.

It is the advanced reading. So the market is giving the number a free pass (or so it seems). However, you can't have your cake and eat it too. Last quarter the inventories added +0.80% to the GDP. Nevertheless, the reaction is limited.