Two-Thirds of 4Q2011 GDP Growth Was Inventories

GDP for 4Q2011 was revised upward to +2.98%.

This is second of three readings, first reading was 2.8%.

The Problem is that almost two-thirds (1.88% of the 2.98%) was in wholesale inventory growth, and that will be given back if consumer spending does not keep pace.

Here’s my 4Q2011 GDP writeup from first release that still holds. And here is today’s full report.

It’s also worth re-stating that real (inflation-adjusted) GDP increased 1.7% for all of 2011 after increasing 3% in 2010. The slowdown was mostly from decreasing inventory investment and government spending. The government spending slide was the largest annual decline since 1971.

Here’s annual GDP for the past 4 years.

And here is today’s other data…

MBA Mortgage Applications
-Composite Index, Week/Week -0.3%
-Purchase Index, Week/Week +8.2%
-Refinance Index, Week/Week -2.2%
-Purchases may have been bumped by the 3-day Presidents Day weekend.

Chicago PMI (February 2012)
-This is another measure of wholesale activity.
-Business Barometer Index Level 64.0. Previous was 60.2