GDP report: Economic growth revised sharply lower

[Pale Blue Dot]

Source: CNN Money

NEW YORK (CNNMoney) -- The economy grew much slower than originally thought at the end of 2010, according to new estimates released by the government Friday.

Gross domestic product, the broadest measure of economic activity, was revised sharply lower to an annual growth rate of 2.8% in the three months ending in December. The initial reading had been for a 3.2% growth rate in the period.

That's a surprising dip, given that economists were expecting the rate to be revised upward to 3.3%.

The revision came as consumers spent less than originally expected, and the country imported more goods than in the initial report. Less state and local government spending also lowered the rate.

Read more: http://money.cnn.com/2011/02/25/news/economy/gdp_revision/

[Roland99]

1. Guess we need MORE tax cuts for the rich. It's obviously not working well enough yet.

[Cassandra]

3. And we can throw more people out of work.

[OHdem10]

2. Remember this talking point: Goldman Sachs yesterdy: The

GOP Cuts in the House Plan would cause a drop of 2 Pts
in GDP. Folks the job losses would be devastating.
Current GDP 2.8 minus 2 would leave us a mere .8 GDP.

Practically no job formation.

[FreakinDJ]

4. Will the GOP Economics caused the Great Depression in 1929

what makes you think they won't do it again

[OHdem10]

5. Look, I have yelling over and over, the GOP is taking us down

the same road to ruin.

My point is this is not Democrats or Activists
saying the House Plan will drop the GDP by 2 points.
It is Goldman Sachs.

[groundloop]

6. Methinks the GOP would like to see this economy in shambles....

that way they can blame President Obama for the mess (and enough people would believe the BS to give total control of the country back to the repukes).

[FreakinDJ]

8. That and the Wealthy Elite can buy us out @ $.05 on the Dollar

How many fortunes were made during the last Great Depression

[bemildred]

7. Gosh, I'm stunned, the expecters were too optimistic once again?

:sarcasm:

[The2ndWheel]

9. Good news for the pale blue dot

[Renew Deal]

10. The republicans won the election and the economy tanked.

That was easy.

[ixion]

11. I remember debating this with some politico here on DU when the original numbers came out

he/she was chastising, mocking and snarking about how I wasn't even as remotely qualified to judge the numbers as the folks in the government who released the report, and therefore I should STFU.

I said, and I quote: "Watch for these numbers to be revised lower in the near future."

And I was correct.

[ProSense]

12. Here's the report

BEA: National Income and Product Accounts Gross Domestic Product, 4th quarter and Annual 2010 (second 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 2.8 percent in the fourth quarter of 2010,
(that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the
Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent.

The GDP estimates released today are based on more complete source data than were available
for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 3.2
percent (see "Revisions" on page 3).

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 negative contributions from private inventory investment and state and local government
spending. Imports, which are a subtraction in the calculation of GDP, decreased.

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

Final sales of computers added 0.30 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 0.31
percentage point from the fourth-quarter change in real GDP after adding 0.49 percentage point to the
third-quarter change.

<...>

Real federal government consumption expenditures and gross investment decreased 0.2 percent
in the fourth quarter, in contrast to an increase of 8.8 percent in the third. National defense decreased
2.1 percent, in contrast to an increase of 8.5 percent. Nondefense increased 3.7 percent, compared with
an increase of 9.5 percent. Real state and local government consumption expenditures and gross
investment decreased 2.4 percent, in contrast to an increase of 0.7 percent.

<...>

Revisions

The downward revision to the percent change in real GDP primarily reflected an upward revision
to imports and downward revisions to state and local government spending and to personal consumption
expenditures (PCE) that were partly offset by an upward revision to exports
<...>

2010 GDP

Real GDP increased 2.8 percent in 2010 (that is, from the 2009 annual level to the 2010 annual
level), in contrast to a decrease of 2.6 percent in 2009.

The increase in real GDP in 2010 primarily reflected positive contributions from private
inventory investment, exports, PCE, nonresidential fixed investment, and federal government spending.
Imports, which are a subtraction in the calculation of GDP, increased.

The upturn in real GDP primarily reflected upturns in exports, in nonresidential fixed
investment, in PCE, and in private inventory investment and a smaller decrease in residential fixed
investment that were partly offset by an upturn in imports.

The price index for gross domestic purchases increased 1.3 percent in 2010, in contrast to a
decrease of 0.2 percent in 2009.

Current-dollar GDP increased 3.8 percent, or $538.8 billion, in 2010. In contrast, current-dollar
GDP decreased 1.7 percent, or $250.1 billion, in 2009.

During 2010 (that is, measured from the fourth quarter of 2009 to the fourth quarter of 2010),
real GDP increased 2.7 percent. Real GDP increased 0.2 percent during 2009. The price index for gross
domestic purchases increased 1.2 percent during 2010, compared with an increase of 0.5 percent during
2009.

<...>

Decreased spending clearly contributed to the downward revision.