To refresh your memory, here is my post from a month ago when the advance numbers came out. Note the chart at the bottom.
Here's today's news release. Real GDP was up 3.8% (annual rate) for the 4th quarter of 2004. That's considerably higher than the advance number of 3.1% and even higher than the 3.5% that was expected by analysts a month ago. It's even a little bit higher than what analysts were expecting earlier in 2004. If the economy can maintain this rate for a few quarters, I think a lot of people would be happy. Whether that is likely is a post for another day.
Where did the increase come from? Well, a good part of it undoubtedly came from the undercounting of exports to Canada in the advance figures. Ooops! The rest, according to the BEA is due to increases in inventory investment as well as the category for equipment and software.
Angry Bear has a nice chart which shows that while residential investment is growing more slowly, nonresidential investment is increasing at a pretty good pace, with only a minor hiccup in early 2004.
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