4Q GDP Revised Downward

[Stocks-to-Watch]

Today the Commerce Department revised its fourth quarter GDP down to an inflation-adjusted annual rate of 2.8%, from its original estimate of 3.2%.

That figure is smaller than than the 3.3% upward revision that analysts polled by Dow Jones Newswires were anticipating.

While holiday shoppers still made a decent turnout, they didn’t spend as much as originally estimated, and shrinking state and local government spending also weighed on GDP. Exports were unable to make up the difference, as many economists were expecting.

However, John Ryding and Conrad DeQuadros of RDQ Economics wrote in a research note today that the revision did not materially impact their thesis about the country’s upward trajectory:

“Though growth was more moderate in the fourth quarter than initially reported, these revisions do not materially change the message of the Q4 GDP report—a surge in real final sales (GDP less inventories) was partially offset by a 3.7%-point subtraction that resulted from the massive slowing in inventory investment in the quarter.* The fact that the economy built almost no inventory in the fourth quarter sets the stage for a pickup in growth in the first quarter.* We still think the economy is on track to grow by 3% to 3½% in the first quarter and by 3½% for 2011 as a whole—next week brings important (and more current) updates on the economy with the ISM surveys and employment for February.”



Original Article Source by Barrons.com