GDP growth revised upBut when the numbers are parsed, things don't look so good. In fact, they're pretty bad.
Gross domestic product, or GDP, which measures total goods and services output within U.S. borders, expanded at a 2.5 percent annual rate instead of 2.2 percent, the department said in its final revision of fourth-quarter economic performance. Economists had expected the final fourth-quarter reading of GDP growth to be unrevised at 2.2 percent.
The final figure was up from a 2 percent rate in the third quarter and meant the economy expanded by a solid 3.3 percent during the whole of 2006. It was the third straight year that GDP expanded at a rate over 3 percent, following growth of 3.2 percent in 2005 and 3.9 percent in 2004.
The department said companies added to inventories at a $22.4-billion annual rate in the closing quarter of 2006 rather than the $17.3 billion rate it reported a month ago and said that was the main reason for the upward revision in fourth-quarter GDP. Higher inventories were mostly accounted for by larger stocks of motor vehicles. Larger inventories can reflect a backlog of unsold goods or businesses building stocks up in anticipation of better sales ahead.There's really no way to spin this as a good revision.
...[T]he fourth-quarter GDP report showed that investment in new-home building plummeted by 19.8 percent - even steeper than the 19.1 percent fall estimated a month ago - and has declined for five straight quarters. The fourth-quarter drop was the sharpest since a 21.7 percent plunge in the first quarter of 1991 when the economy was on the brink of recession.
There was also a significant revision in spending on equipment and software, which dropped at a 4.8 percent annual rate during the fourth quarter - the largest decline since 4.9 percent in the fourth quarter of 2002 - instead of the 3.2 percent drop reported a month ago. That was a sharp turnaround from the third quarter when equipment and software spending grew at a 7.7 percent rate.