The last of the regular revisions of the quarterly GDP estimates for 2009 shows 5.6% GDP growth rate in 4Q 2009. That’s down from the 2nd revision’s estimate of 5.9%. Not a big adjustment, but disturbing that the source of the adjustment is a downward revision in C and I. C (represented as PCE-Personal Consumption Expenditures) in the table below and I (investment: the other three items) were weaker than previously thought. Not a good sign. For a true, solid recovery we need those to get much stronger. Prospects for a possible “double-dip” recession continue to be good. I put it at even money. Now is definitely not the time to be cutting back on G expenditures.
The headline GDP number was revised down to 5.6% annualized growth in Q4 (from 5.9%). The following table shows the changes from the “advance estimate” to the “second estimate” to the “third estimate” for several key categories:
Advance Second Estimate Third Estimate GDP 5.7% 5.9% 5.6% PCE 2.0% 1.7% 1.6% Residential Investment 5.7% 5.0% 3.8% Structures -15.4% -13.9% -18.0% Equipment & Software 13.3% 18.2% 19.0%
Note that PCE and Residential Investment (RI) – the two leading categories – were both revised down for Q4. This suggests that final demand was weaker in Q4 than in the previous two estimates.