March 28th, 2016 8:18 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

Just a very quick review of the Q4 GDP revision, since most of us were out on Friday.  Real GDP growth was revised higher on Friday to 1.4% annualized, a pleasant surprise.  The bulk of the upward adjustment came in consumption, as services outlays were boosted.  Overall, consumer spending managed a 2.4% annualized advance in Q4, a solid performance, especially considering the drag that warmer weather caused (mainly due to less utility usage but also by dampening demand for winter merchandise).  Elsewhere, the revisions were mostly minor.  While a 1.4% increase is obviously not stellar, it looks a lot better than the prior print of 1.0% (or the first print of 0.7%).  However, Q1 estimates have gravitated lower recently and are currently around 1½% (though that includes a significant inventory drag).

The other data point from this release that garnered some attention was the corporate profits estimate for Q4.  The figure sank by 7.8% on the quarter, which sounds really bad.  It’s clearly not a good result, but $125 billion out of the overall $160 billion drop came from the petroleum industry, and well over $80 billion of that reflected the booking of a legal settlement between BP and the government.  So, it’s bad, but not nearly as bad as it looks for corporations outside of the oil and gas sector.

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