The economy grew faster at the end of Donald Trump’s presidency than was previously thought.
Real gross domestic product increased at an annual rate of 4.3 percent in the fourth quarter of 2020, a faster pace than the previously reported 4.1 percent rate.
The revised GDP figure helps explain why so much of the data for the start of 2020 has beat expectations. The economy was already running hotter than we thought. President Trump handed off a better-than-expected economy to his Democrat rivals.
The “third” estimate of GDP released Thursday is based on more complete source data than were available for the “second” estimate issued last month. The Bureau of Economic Analysis said the upward revision primarily reflected an upward revision to private inventory investment that was partly offset by a downward revision to nonresidential fixed investment.
The government said that GDP growth reflected increases in exports, nonresidential fixed investment, personal consumption expenditures, residential fixed investment, and private inventory investment. These were partly offset by decreases in state and local government spending as well as federal government spending. Imports, which are a subtraction in the calculation of GDP, increased in the fourth quarter.
Consumption spending was revised down a tick to 2.3 percent from the prior estimate of 2.4 perceent. Inflation was softer than previously reported, with the personal consumption price index rising just 1.5 percent, down from the earlier estimate of 1.6 percent. Core PCE inflation, which excludes fuel and food, rose just 1.3 percent.