U.S. Q4 GDP Upgraded Modestly

9 years ago - Published in Finance, Fundamental Analysis

United States, GDP, 1st Revision, Q/Q % Change (SAAR), Q4
Actual: 1
Consensus: 0.4
Scotia: 0.4
Prior (1st Estimate) : 0.7

 

  • GDP for Q4 2015 was upgraded today. Inventories and imports were the main factors.
  • Inventory stocking was marked up and is now estimated to have dragged 14bps from growth vs. 47bps originally.
  • The other swing factor was an upgrade to imports, which changed from a -16bps drag to a +9bps add.
  • The main take-away is that Q4 was a bit weak, though less so than initially thought, and the outlook for Q1 is fairly positive as the inventory drag from Q4 should reverse. That said, the inventory drag for Q4 is now less than had been initially estimated, so one might rationally reduce one’s estimates for an inventory bounce in Q1. That said, there still should be some support from that quarter.
  • The more important factor is that the Q1 2016 GDP print is shaping up well — though of course it’s early days. The Atlanta Fed Nowcast is tracking at 2.5% q/q SAAR. There is a bit of a ‘history lesson’ element to today’s GDP revision.
  • The only other factor to change in any meaningful increment was government consumption, which swung to a -0.1% q/q SAAR decline from an initially estimated +0.7% increase. This was a function of markdowns both to defense spending and state-and-local government spending.
  • Personal consumption spending was marked down very incrementally to 2% q/q vs. an initial estimate of 2.2% q/q. The main revision risk for consumer spending, however, comes on the third estimate (March 25th) which incorporates the Quarterly Survey of Services.

 

 

Derek Holt, Dov Zigler

Scotiabank Economics