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GDP Growth More Positive in Revised Report

Real gross domestic product (GDP) rose at an annual rate of 0.4 percent in the fourth quarter, the ""Bureau of Economic Analysis"":http://www.bea.gov/newsreleases/national/gdp/2013/gdp4q12_3rd.htm (BEA) reported Thursday. The report, coming just three days before the end of the first quarter, was an improvement over the first two GDP reports that showed the economy contracted by 0.1 percent then improved by 0.1 percent.

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While the revised numbers are hardly anything to get excited about, they could give the economy a running start as it heads into the second quarter.

Economists surveyed by Bloomberg had expected GDP to grow by a 0.6 percent seasonally adjusted annualized growth rate. At 0.4 percent, the annualized fourth-quarter growth rate was the weakest since Q1 2011, when the economy grew at 0.1 percent. Since the officially declared ├â┬ó├óÔÇÜ┬¼├àÔÇ£end├â┬ó├óÔÇÜ┬¼├é┬Ø of the recession in mid-2009, the average quarterly growth rate (annualized) has been 2.4 percent.

BEA, in reporting the revision in GDP, said it was based on more complete source data than were available for the ""advance"" estimate issued in January or the estimate issued in February.

Real personal consumption (adjusted for inflation) increased 1.8 percent from the third quarter to the fourth, slightly faster than the 1.6 percent increase from the second to the third. Non-residential fixed investment was up 13.2 percent in the fourth quarter after falling 1.8 percent in the third.

The main drag on the fourth quarter economy--as it had been in the previous two fourth-quarter reports--continued to be government spending. Although the mandated sequester cuts kicked in on March 1, most of the impact will be delayed. Nonetheless, reduced government spending in the fourth quarter, down an estimated $45 billion from the third quarter, subtracted an estimated 1.4 percentage points.

The report also includes estimates of corporate profits in the fourth quarter, showing them at $453.8 billion for the quarter, down from $457.3 in the third quarter. Full year profits for 2012 were up $51.3 billion after a $2.7 billion loss in 2011. .

Headline inflation for the GDP price index showed a 2.2 percent annualized inflation rate for 2012, up from 1.8 percent in 2011. Excluding food and energy, inflation was revised to 1.7 percent for 2012, down from 1.9 percent in 2011.

_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. and again at 9:20 a.m. Eastern time._

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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