–2011 GDP Revised Up To +1.8% From Previous +1.7%
–In 2011, Strong Upward Revisions To 2Q, 4Q; Downward To 1Q, 3Q
–Upward Revision To 4Q11, Now +4.1% Vs Previous +3.0%
–Large Downward Revisions To 1Q10, 2Q10, Both Cut 1.6 Percentage Point
–Contraction Period GDP 4Q07-2Q09 Revised Up To -3.2% Vs Prev -3.5%
–Expansion Period GDP 2Q09-4Q11 Revised Down To +2.3% Vs Prev +2.4%

By Kevin Kastner

WASHINGTON (MNI) – Armed with updated source data, the U.S. Bureau
of Economic Analysis Friday released revised estimates for economic
growth that show the increase in GDP in 2011 was slightly better than
previously estimated, but followed a downward revision to growth in 2010
on slower nonresidential fixed investment growth than previously
estimated.

GDP growth was also revised up in 2009 on a strong upward
adjustment to state and local government spending, but remained sharply
negative. The BEA said that the pattern of growth over the 2009-2011 was
“largely unchanged” from the previously reported pattern.

The trajectory of GDP growth through the recession and recovery
remained roughly unchanged after the revisions, though upward revisions
to the declines in the first two quarters of 2009 and sharp downward
revisions to the first two quarters of 2010 flattened the percent change
slightly.

For the usual 3-year revision period of 2009, 2010, and 2011
combined, growth was revised down to a 0.3% rise at an annual rate from
the previously reported 0.4% rise over that period.

In 2011, the annual rate of growth in GDP was revised up very
slightly to 1.8% from the 1.7% increase originally estimated. There were
upward revisions to growth in the second and fourth quarters, but
downward adjustments to growth in the first and third quarters.

On a Q4/Q4 basis, GDP is now reported up 2.0% in 2011, an upward
adjustment from the originally published 1.6% gain.

According to the BEA, the key factors in the upward revision for
2011 were upward adjustments to PCE and inventory investment. These were
offset by downward revisions to state and local government spending,
federal government spending, and nonresidential fixed investment.

The annual revisions are being released to coincide with the
announcement of the revised first-quarter and advance second-quarter GDP
data for 2012.

The reading for fourth quarter 2011 GDP was revised up sharply to a
4.1% gain from the previously reported 3.0% rise. The reading for third
quarter GDP was revised down to a 1.3% rise from the previously reported
1.8% gain.

The reading for second quarter 2011 GDP was revised up sharply to a
2.5% rise from the previously reported 1.3% gain, the second largest
upward revision to GDP in the period under review after the first
quarter of 2009.

The reading for first quarter 2011 GDP was revised down to a 0.1%
rise from the previously reported 0.4% increase.

For the period of contraction that began in the first quarter of
2008 and ran through the second quarter of 2009, the change in GDP was
revised up to a 3.2% drop at an annual rate from the previously reported
3.5% decline.

Upward revisions in the first two quarters of 2009 due to state and
local government spending were the key factors in the upward revision to
the contraction period.

BEA noted that when the contraction period is not annualized, but
rather reported as the actual drop over the six quarter period, GDP fell
4.7% — smaller than the 5.1% decline reported previously but still the
largest such contraction in the post-war period.

For the recovery period from the third quarter of 2009 through the
fourth quarter of 2011, growth is now reported a 2.3%, a slightly slower
rate than the 2.4% rise previously reported. The adjustment was due in
large part to a sharp downward revision to nonresidential fixed
investment in 2010.

The cumulative growth over that period, that is without
annualization, now stands at 5.8%, slightly below the 6.2% growth
reported previously.

For 2010, GDP growth was revised down to a 2.4% rise from the
previously reported 3.0% increase. Downward adjustments to
nonresidential fixed investment, PCE and inventory investment were the
key factors that year.

Deceleration in 2009 was revised up to a 3.1% annual rate of
decline from the previously reported 3.5% decline. Upward adjustments to
state and local government spending and inventory investment were the
key factors in the revision to 2009 growth.

Current dollar GDP, like real GDP, was revised up in 2009 and 2011,
but revised lower in 2010. Final sales growth was unrevised in 2011, but
was revised up in 2009 and down in 2010.

The chain price index was revised down in 2009, up in 2010 and was
unrevised in 2011. The closely watched core PCE price index followed the
same pattern.

PCE was revised up in 2011 and now stands at a 2.5% annual rate of
increase, compared with the 2.2% increase previously reported. PCE was
revised lower in 2010 and was unrevised in 2009.

In 2011, PCE was revised up in the first and second quarters, but
was revised down slightly in the fourth quarter.

Residential fixed investment was revised down in 2009 and 2011 to
larger declines, but revised up to a smaller decline in 2010. For 2011,
there were upward revision in the first, third, and fourth quarters, but
a downward revision to the second quarter.

Nonresidential fixed investment was revised down in all three of
the most recent years, but most noticeably in 2010, when nonresidential
investment was revised sharply lower to a 0.7% rise from the previously
reported 4.4% rise. In 2011, nonresidential investment was revised down
sharply in the first quarter, offset by upward revisions to the other
three quarters.

The change in private inventories was still sharply negative in
2009, but was revised up modestly. There were downward revisions to
inventory growth in 2010 and 2011. For 2011, inventory growth was
revised up in the fourth quarter, but revised down in the first three
quarters of the year.

The net exports gap were revised narrower in each of the last three
years. For 2011, the gaps are now narrower in the first three quarters
of the year, but slightly wider in the fourth quarter.

Government purchases were revised up sharply in 2009 due to the
adjustment to state and local government spending, and now stands at
a 2.2% rise compared with the previously reported 0.9% decline.
government spending was down in both 2010 and 2011, with the 2011
government spending now down 3.1% in 2011, a full percentage point lower
than the previous estimate.

For 2011, there were downward revisions to government spending in
first and third quarters, but upward revisions in the second and fourth
quarters.

On the income side, personal income was revised down in all three
years, though the percent changes were revised up slightly in 2010 and
2011. For 2011, there were downward revisions to personal dividend
income, transfer payments, and farm proprietor’s income. Wage
supplements and interest income were revised up.

Personal taxes were revised up in each of the three years, so
disposable personal income followed the same trend as personal income,
with downward revisions every year.

The personal savings rate was revised down in each of the last
three years, with the 2011 rate seeing the largest adjustment. The
personal savings rate in 2011 now stands at 3.4%, down from the 4.2%
rate originally reported.

The percent change in pre-tax corporate profits from current
production was revised lower in all three years, though every year
remained positive.

** MNI Washington Bureau: 202-371-2121 **

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