Gross domestic product net of inflation (real GDP) rose at a seasonally adjusted annual rate (SAAR) of 4.0% in the fourth quarter of 2003, the Bureau of Economic Analysis announced today. BEA cautioned that this “advance” estimate tends to be revised over the next two months by an average of 0.6 percentage points up or down. This was solid growth but broke a string of rising real GDP gains (1.3% a year ago, then 2.0%, 3.1%, and 8.2%). For the year, real GDP rose 3.1%, up from 2.2% in 2002 and 0.5% in 2001. Investment in nonresidential structures (including mining and petroleum structures) in the fourth quarter rose at a SAAR of 0.3% before inflation (vs. 0.6% in the third quarter, and fell 3% after accounting for inflation (vs. -1.8%). For the year, real investment in nonresidential structures fell 4.7% after fallling 18.4% in 2002 and 2.5% in 2001.
The broadest measure of inflation, the GDP price index, rose just 1.1%, down from 1.6% in the third quarter and level with the second-quarter rate. In a commentary this morning, Wachovia's John Silvia noted that consumer durables and business equipment “faced deflation in 2003. Other sectors (consumer services) faced steady inflation at 2.8% while several sectors faced rising inflation (exports and imports, nondurable goods, and state and local spending).” The price index for nonresidential structures accelerated to a 4.1% inflation rate from 2.7% in the third quarter and 1.1% in the second.