Friday, January 28, 2011

USA GDP Q4 2010 Estimated at +3.2% (Quarterly GDP Charts) *2010 Annual GDP +2.9%*


Bureau of Economic Analysis: USA Quarterly GDP Estimate

USA 2010 Q4 GDP Advance Estimate +3.2%

Official Statement by the Bureau of Economic Analysis is at bottom of this post.

USA GDP Q4 Advance Estimate The Bureau of Economic Analysis released the Advance Estimate of 2010 Q4 GDP which was +3.2%, for a total GDP of $14.87 trillion. The advance estimate of Q4 2010 is a +0.6% improvement over the 2010 Q3 GDP of +2.6%. Q4 GDP is below the Q1 GDP of +3.7% and well below the 2009 Q4 GDP of +5.0%. However the GDP has increased for 2 consecutive quarters and is an improvement on Q2 +1.7% and Q3 +2.6%.

USA GDP 2010 The Bureau of Economic Analysis estimated the 2010 GDP at +2.9%, compared to -2.6% in 2009, 0.0% in 2008, and +1.9% in 2007. The USA annual GDP will be reviewed in a subsequent post.

GDP +3.0% A +3.0% annualized GDP growth rate is generally accepted as the minimum necessary to generate some jobs  growth. Therefore, the USA economy grew at a rate in Q4 2010 to create some jobs and bring down the unemployment rate. The Big Question: where is the USA economy headed? Three scenarios are usually discussed: 1) a double dip recession whereby the GDP will turn negative, 2) the economy will continue "bottom bouncing" with very slow growth and a continuing high unemployment rate (i.e., less than or near +3.0% growth), or 3) the bottom is in and GDP growth will accelerate to above +3.0% and continue above, jobs will be created, and the unemployment will continue to decrease. Scenario 2) with USA slow economic growth appears to be the consensus for 2011.

USA GDP % by Quarter (Chart) The chart below is the annualized percentage change of the GDP (seasonally adjusted at annual rate) from the preceding quarter (QoQ), the most common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning 2008 Q2, a rebound peaking in 2009 Q4, a downward trend in 2010 Q1 and Q2. The USA economy appeared to be at a crossroads at 2010 Q2: a continuing downwards trend towards zero growth or a bounce upwards from there? The 2010 Q3 +2.6% (third estimate) was a bounce upwards and the 2010 Q4 +3.2% continues the uptrend. The Federal Reserve via the Federal Open Market Committee has resorted to QE2, a second round of quantitative easing, plus indirect quantitative easing in an attempt to boost the economy, increase the GDP, and bring down the unemployment rate. The chart covers the last 24 quarters of the USA GDP as reported by BEA from 2005 Q1 through 2010 Q4 (advance estimate).

USA GDP $ by Quarter (Chart) The chart below is the GDP (seasonally adjusted at annual rate) in total current dollars. As can be seen, the USA economy peaked in 2008 Q3, bottomed in 2009 Q2, and now has increased 6 consecutive quarters. The Q4 2010 has exceeded both 2008 Q3 and the previous peak in 2010 Q3. The chart covers the last 24 quarters of the USA GDP as reported by BEA from 2005 Q1 through 2010 Q4.

The Bureau of Economic Analysis Commentary on the 2010 Q4 GDP of +3.2% (Advance Estimate)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.2 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 25, 2011.

The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

The acceleration in real GDP in the fourth quarter primarily reflected a sharp downturn in imports, an acceleration in PCE, and an upturn in residential fixed investment that were partly offset by downturns in private inventory investment and in federal government spending and a deceleration in nonresidential fixed investment.

Final sales of computers added 0.31 percentage point to the fourth-quarter change in real GDP after adding 0.29 percentage point to the third-quarter change. Motor vehicle output subtracted 0.34 percentage point from the fourth-quarter change in real GDP after adding 0.49 percentage point to the third-quarter change.

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