Real gross domestic product (GDP) increased at an annual rate of 6.9 percent in the fourth quarter of 2021 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.3 percent.
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Real GDP increased 5.7 percent in 2021 (from the 2020 annual level to the 2021 annual level), in contrast to a decrease of 3.4 percent in 2020 (table 1). The increase in real GDP in 2021 reflected increases in all major subcomponents, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports increased
All of which sounds really good and seems to be "great" news. Being the contrarian, I seem to find things that trouble me. The inventories and correlation to consumer spending. They look stellar on the annual basis, but 4th quarter seems troubling to me.
The inventory numbers made up about 73% of the 4th quarter numbers. The difference being a chabe for the 6.9% annualized to something akin to 1.8% annualized. Which even at that lower number was better than the meager 0.48% rise in the goods category sans services and 3.2% annualized with services. Rah! Rah!
The report does make note of certain durable goods making up the increases in inventory, yet overall consumer spending in this category is barely making gains. That is not surprising, given the past year, but not sure how consumer spending will react going forward.
Setting aside the inventories and intellectual property products... the Gross private domestic investment category slid -1.2% annualized.
Personal consumption expenditures rose 3.2% annualized, but on the back of services with a respectable 4.8% annualized rise. Without the services... 0.36% annualized.
My small brain cannot find all that "wonderful" news, but I may be overthinking it, considering my small brain.
To summarize, the consumer spending, which is the driver of the economy, is slowing considerably; the private sector sans the aforementioned... is slowing.
So if inventory is rising dramatically, then one of the following would seem the likely cause...
- The supply chain snarls are finally becoming unsnarled
- Suppliers have increased production
- Consumers are slowing their purchases
Not real sure how this can be seen in such a positive light, especially with the doldrums of winter upon us, the negative outlook of the consumers, etc. Unless the latter weighs on inflation and slows it down a bit.
