The advanced report for the fourth quarter gross domestic product revealed a 0.2% gain that bucked market expectations for a decline of roughly 1.0%. The chain price index actually decreased 0.3% as we warned, due largely to the huge decline in globally traded commodity prices along with a rebound in service import prices from the attack-distorted third quarter level.
GDP strength was led by a big 5.4% gain in consumer spending, which topped even our aggressive estimate for a rise of 4.3%, and which added 3.6% to overall GDP growth. Government spending also was a big positive, with a gain of 9.2% that boosted GDP an additional 1.6%.
Holding down GDP, however, were large declines in inventories, fixed investment and net exports. Companies liquidated inventories at a record $120.6 billion rate, which left the draw-down subtracting a hefty 2.2% from overall growth. Fixed investment dropped 11.1%, led by a large decline in commercial construction, which reduced GDP growth by an additional 1.9%. Exports declined 12.4% and imports fell 3.4%, which left net exports subtracting 0.9% from GDP.
The fourth quarter GDP data leave most of the risk in first quarter GDP decisively to the upside. From Standard & Poor's Global Markets