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US GDP October-December breaking news accelerated to 6.9% increase-Inventory increase resumed contribution-Bloomberg

US economic growth in October-December last year (fourth quarter) accelerated faster than the market expected. The resumption of inventory buildup contributed. It was the highest growth since 1984 for the whole year.

Key Point
  • Preliminary real gross domestic product (GDP) for October-December increased by 6.9% year-on-year
    • The largest quarterly growth rate in the last year or so
    • Median economist forecast for Bloomberg survey up 5.5%
    • July-September (third quarter) up 2.3%

GDP change rate transition (light blue bar graph), personal consumption change rate transition (white line graph)

Source: Bureau of Economic Analysis, Bloomberg Survey

The GDP contribution of inventory is 4.9 points. Inventories are expected to continue to be a tailwind for economic growth this year. Due to a prolonged supply shortage, companies have responded to strong demand with inventories last year. Companies have begun to resume inventory buildup, which is expected to boost production.

Inventories accounted for huge share of GDP acceleration amid mediocre demand

Changes in inventory GDP contribution (light blue bar graph), changes in final demand (white line graph)

Source: Bureau of Economic Analysis

Private consumption, which accounts for the largest part of GDP, increased by 3.3%, which is almost the same as the market forecast (3.4%). Growth accelerated from a 2% increase in the previous quarter.

The core consumer spending (PCE) price index, excluding energy and food, which the US financial authorities are paying attention to, has risen 4.9% annually.

Final demand, excluding net exports and inventories from GDP, rose 1.9%, slightly above the third quarter (1.3%).

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