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    January 30, 2015

    Gross Domestic Product Q4 2014 First Estimate

    Written by Peter Wright

    The Bureau of Economic Analysis (BEA) released the first estimate of Q4 2014 Annual Revision of the National Income and Product Accounts on Friday.

    The annualized growth rate in the 4th Q disappointed economic pundits by coming in at 2.64 percent after increasing by almost 5.0 percent in Q3. GDP is measured and reported in chained 2009 dollars and in Q4 was estimated to be $16.312 trillion. The calculation is slightly misleading because it takes the Q over Q growth and multiplies by 4 to get an annualized rate. This makes the high quarters higher and the low quarters lower. Figure 1 clearly shows this effect. The blue line is the trailing 12 months growth and the white line is the headline quarterly result. On a year over year basis GDP was 2.48 percent higher in the 4th quarter than it was in Q4 2013 and that result is in line with performance since Mid-2010. Q1 of 2104 had negative 2.21 percent growth due to the appalling winter in the North East US and the 2nd and 3rd quarter results which were very strong were likely playing catch-up. The fact that Q4 was very close to the year as a whole tends to support that view.

    Peter Wright

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