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Q4 GDP sees slight upward revision; NAFCU expects 2021's Q1 GDP to reflect growth
The Commerce Department released its revised estimate for 2020 fourth quarter economic growth, revealing the U.S economy grew 4.1 percent – an upward revision from the initial estimate. NAFCU Chief Economist and Vice President of Research Curt Long noted that growth was "strong by pre-coronavirus standards but slowed significantly as the recovery stalled and infections grew."
For the year, real GDP declined 3.5 percent in 2020 – the first annual decline since the Great Recession and the largest since 1946.
"While most measures declined versus last year, residential investment was a notable exception, rising 6 percent," said Long in a new NAFCU Macro Data Flash report. "Spending on goods was also strong, but services consumption collapsed. It is likely that growth slowed over the course of the fourth quarter, as rising COVID cases led to stricter social distancing, culminating in the loss of 140,000 jobs in December.
"Early indications are that first-quarter growth will be robust, and NAFCU expects that momentum to carry through the rest of the year," Long concluded.
According to the updated estimate, contributions to real GDP came from personal consumption (+1.6 percent), with the entirety of the gain coming from the services sector and investment (+4.2 percent). Net exports deducted 1.6 percent while government consumption deducted 0.2 percent.
PCE inflation, the Fed's preferred inflation metric, increased slightly in the revision to 1.6 percent from the initial 1.5 percent rise. Meanwhile, core PCE inflation (excluding food and energy) was not changed at its 1.4 percent rise over the quarter.