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Q4 GDP Revised Up to 3 Percent, Beating Estimates

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 3 percent in the fourth quarter of 2011, the ""Bureau of Economic Analysis"":http://www.bea.gov/ reported Wednesday. In its initial report on fourth quarter GDP, the BEA had said the nation's economy grew at a 2.8 percent pace. Economists had forecast no change in the ""advance"" GDP estimate issued last month.

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The faster growth, BEA said, primarily reflected an upward revision to nonresidential fixed investment and to personal consumption expenditures (PCE) offsetting downward revisions to imports. Because most of the adjustment was due to new December data, the revisions suggest the economy gained some momentum at the end of the quarter.

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Overall, the faster GDP growth in the fourth quarter was due to an increase in private inventory investment, (PCE), exports, nonresidential fixed investment, and residential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Inventory investment accounted for nearly two-thirds of the increase in economic output, a gain that is likely unsustainable, suggesting economic growth in early 2012 is likely to slow from the fourth quarter pace.

BEA issues three GDP ""reports"":http://www.bea.gov/newsreleases/national/gdp/2012/gdp4q11_2nd.htm for each quarter: an ""advance"" report one month after the quarter ends and revisions in each of the following months as more data is received.

Residential fixed investment grew by $9 billion in the fourth quarter, compared with $1 billion in the third.

Housing â€" technically reported as ""residential fixed investment"" â€" grew at an 11.5 percent annual pace in the fourth quarter, its fastest growth rate since the second quarter of 2010 when it grew at a 22.8 percent rate.

Personal consumption expenditures are the largest piece of GDP â€" 70.6 percent down from 70.8 percent in the previous quarter â€" while residential fixed investment represented 2.5 percent of GDP in the fourth quarter, up from 2.3 in the third.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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