Revised 4th Quarter 2011GDP

Real output in America was better in the final quarter of 2011 than the Bureau of Economic Analysis initially thought.  Their revised calculation shows the economy grew by an annualized rate of 3.0 percent.  The preliminary reading was 2.8 percent.  This revision will be looked at again over the next month before a “final” number is tabulated.  To put it into perspective, the third quarter of 2011 grew by 1.8 percent.

Quarter-over-quarter growth was found in a variety of the economy’s components.  Business investment was revised slightly higher as companies increased purchases of computers and software.  As we mentioned in our most recent posting for durable goods orders, this may have been influenced by expiring tax incentives that companies wanted to take advantage of.  Home builders helped the growth by building more single-family and multi-family dwellings at an annualized 11.5 percent clip.  Personal consumption was revised higher, but the figure is lackluster overall. This is the economy’s bread and butter; it only managed a 2.1 percent annualized improvement. This is the weakest quarterly gain since the first three months of 2010.  The primary growth driver last quarter remains inventory builds.  Companies saw the stock of goods on their shelves increase.  Interpreting the inventory surge can cut two ways; companies are either expecting a bump in demand around the corner or they miscalculated the demand for the fourth quarter.  Atlas hopes for the former but fears the latter.

The economy is not on firm footing. It looks as if the U.S. expanded at 1.7 percent in all of 2011.  That compares to 3.0 percent in 2010.  The post-recession economy continues to be weak relative to other recoveries.  The weakness continues to leave the economy susceptible to outside shocks like high energy prices, geo-political conflicts, or a slowing global economy.  (by C. Cox)