Advance GDP Reports Show Slight Contraction
Posted at 9:11 a.m. on Jan. 30
The Bureau of Economic Analysis released its advance estimate of US gross domestic product in the fourth quarter of 2012, showing a decrease of 0.1 percent.
Forbes notes this is “the first time that the economy contracted in nearly three years. Economists had expected GDP to increase 1%.”
FT Alphaville calls for calm: “don’t start panicking just yet — in addition to possible revisions later, a big reason the number turned negative in Q4 was the huge contraction in federal spending, and mainly in defence… A big inventory swing, possibly the result of waiting for the fiscal cliff negotiations to play out, was the other culprit.”
Bill McBride digs deeper into the report and finds that “the internals were decent with PCE and private investment increasing (domestic demand).”
Matthew Yglesias: “The average quarterly GDP revision amounts to 1.3 percentage points, so we shouldn’t make too big a deal out of the initial number.”