U.S. GDP Growth Is Firm & Little Revised in Q4; Price Gain Remains Moderate

Real GDP growth was revised to 3.2% (SAAR) during Q4’23 from 3.3% reported last month as it followed a 4.9% Q3 increase. A 3.3% rise had been expected in the Action Economics Forecast Survey. Real GDP grew an unrevised 3.1% on a Q4/Q4 basis, after a 0.7% rise in 2022 and 5.4% growth in 2021. Growth averaged 2.5% last year versus 1.9% in 2022.

Contributions to growth from international trade & the change in inventories were revised. Inventories subtracted 0.27 percentage point from GDP growth, revised from a 0.07 percentage point addition reported initially, after contributing 1.27 point to growth in the third quarter. The 0.32 percentage point contribution to growth from net export improvement compared to a 0.43 percentage point estimated last month. It followed two straight quarters of minimal add. Exports grew a marginally-changed 6.4% (2.1% y/y) which followed a 5.4% Q3 rise. Imports grew an increased 2.7%, but were unchanged y/y, after rising 4.2% in Q3.

Growth in real final sales to domestic purchasers was increased to 3.1% (3.1% y/y) from 2.7% after rising 3.5% in Q3. Personal consumption expenditures rose a slightly raised 3.0% (2.7% y/y) after a 3.1% increase, adding 2.0 percentage points to Q4 growth. Durable goods spending growth was lessened to 3.2% (5.7% y/y), following a 6.7% gain. Motor vehicle expenditures fell an upwardly-revised 2.1% (+3.9% y/y), a bit more than it did Q3. Furniture & appliance buying rose 2.5% (2.4% y/y), revised from 4.1%, after a 5.5% gain in Q3 while recreational goods & vehicle purchases grew 7.3% (11.2% y/y) after strengthening 16.9% in Q3.

Nondurable goods outlays improved a little-changed 3.3% (2.1% y/y), following 3.9% growth in Q3. Apparel outlays rose a lessened 3.6% (0.9% y/y) after a 6.2% increase while food & beverage spending rose an unchanged 1.5% (0.3% y/y) following a 1.9% gain. Outlays on gasoline & other energy products rose an increased 4.3% (3.8% y/y), revised from 0.8%, after falling 1.0% in Q3.

Spending on services increased 2.8% (2.3% y/y), revised from 2.4%, last quarter following a 2.2% gain in Q3. Restaurant & hotel accommodations rose 7.9% (4.2% y/y) after gaining 7.1% in Q3, while growth in recreation outlays improved 4.1% (3.8% y/y), revised from 5.1%, after a 2.3% rise in Q3. Transportation services outlays growth of 2.8% (1.4% y/y) was lessened from 5.9% following a 0.9% rise. Housing & utilities outlays rose an unrevised 0.4% (0.7% y/y), after a 3.0% Q3 improvement. Health care purchases rose 1.5% (5.3 y/y), revised from 3.4%, following a 0.7% increase.

Business fixed investment increased 2.4% (4.2% y/y), revised from 1.9% last quarter following a 1.5% Q3 rise as spending on nonresidential structures increased 7.6% (16.0% y/y), revised from 3.2% after rising 11.2% in Q3. Equipment investment fell 1.7% (-0.8% y/y), revised from +1.0% after falling 4.4%. Information processing investment surged 9.4% (-1.3% y/y), revised from 17.4% following four consecutive quarterly declines, while industrial equipment outlays eased 0.2% (-1.8% y/y), revised from a 3.7% gain, after falling 5.4%. Transportation equipment spending weakened a little-revised 21.8% (+2.8% y/y) after a 1.7% drop in Q3. Investment in intellectual property products rose 3.3% (2.9% y/y), revised from 2.1% after a 1.8% rise.

Residential structures investment increased 2.9% (0.4% y/y), revised from 1.0%, after a 6.7% increase.

Government spending increased 4.2% (4.5% y/y), revised from 3.3%, accounting for 0.73 percentage points of GDP growth, after a 5.8% rise. Federal government spending growth of 2.3% (3.9% y/y) was revised from 2.5% and followed a 7.1% jump. State & local government spending grew 5.4% (4.9% y/y), revised from 3.7%, following a 5.0% Q3 rise.

The GDP price index rose 1.6% (2.6% y/y), revised from 1.5% after a 3.3% Q3 gain. A 1.5% rise had been expected. The PCE price index increased a little-changed 1.8% (2.8% y/y) after a 2.6% rise. The PCE price index excluding food and energy prices rose 2.1% (3.2% y/y), about the same as it did in Q3. The PCE goods price index fell 1.4% (+0.1% y/y) after rising 0.9% as gasoline prices fell and services prices rose 3.5% (4.1% y/y), the same as they did in Q3. The services price index less energy & housing rose a minimally changed 2.7% (3.6% y/y) after a 2.9% rise.

The business fixed investment price index rose 1.8% (2.3% y/y) revised from 2.1%, following a 0.9% rise. The residential investment price index increased 4.0% (1.3% y/y), revised from 5.5% after a 4.8% gain. The government spending price index rose a minimally changed 1.8% both m/m and y/y after strengthening 5.1% in the third quarter.

The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.