We finally have the economists' last word on the fourth quarter, for now anyway. In the third and sort of final revision, U.S. GDP grew at a pace of 3.1% in the fourth quarter, according to the Bureau of Economic Analysis. That's better than the 2.8% growth estimated in the second revision, but it's slightly worse than the 3.2% estimated initially. Today's report finalizes the last quarter of 2010's GDP calculation for the time being, but each year a major revision occurs that re-calculates growth for prior years. For now, however, why was growth revised up to 3.1%?
First, here's the chart with some history:
You can see that 3.1% looks pretty good compared to the prior two quarters. But it doesn't look as good compared to the two quarters before that. Obviously, it looks much better than what occurred from 2008 through the first three quarters of 2009.
The difference between 3.1% and 2.8% isn't huge, so there won't be any exciting revelations about certain components of GDP being far better than anticipated. In fact, most contributors of GDP barely shifted from the prior estimate. Of the four major components, consumer spending, net exports, and government spending all revised GDP growth by less than 0.1% compared to the second estimate. That means the bulk of the revision came from business investment.
