Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Wall Street starts cutting back growth outlook

Q4 GDP up 1.0% (revised)

Enthusiasm for stronger-than-expected growth to close out 2015 didn't last very long.

Revised fourth-quarter calculations showed gross domestic product increased 1 percent for the period, by itself a moribund level but looking better when compared to the original estimate of 0.7 percent and Wall Street expectations for something close to 0.4 percent.

The details behind the numbers, however, showed that the upward revision didn't come from unexpected growth. Instead, the rise in the GDP calculation occurred in large part because a sizable inventory build didn't wear off as quickly as anticipated. Inventories helped boost GDP in 2015 and ultimately kept the fourth quarter out of contraction.

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What's left, then, is a quarter ahead that will feature less inventory build. In the formula the Bureau of Economic Analysis uses to calculate GDP, that means the period likely will be less robust as that inventory wears off.

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