GDP Growth Still Primarily Due to Inventory Accumulation

In its final estimate, the Bureau of Economic Analysis downwardly revised Q4 GDP growth to 5.6 percent at an annualized rate compared to 5.9 percent previously reported. The revision was due to lower business investment, consumer spending and inventory growth. Still, growth was strong in the fourth quarter. However, the bulk of the expansion was still due to inventory accumulation by businesses, which added 3.9 percent to growth. Though this adds to output, it is largely temporary in nature as final demand for goods and services have not grown as greatly. Real final sales, which excludes inventories, and therefore measures demand for US output grew by a lesser 1.7 percent annualized. Until this number grows higher, recovery will remain modest.



10.03.26 (Source: Bureau of Economic Analysis)