27 January 2012 at 10:46 GMT
The US economy has so far proved resilient enough to withstand drags from fiscal tightening and the Eurozone debt crisis debacle with today's 4Q'11 GDP report set to show that the economy accelerated for a third quarter in a row by 3 percent (annualised), according to consensus.
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US GDP to show robust growth, but is it only due to inventories? As noted above consensus expects rather sturdy growth of 3 percent driven by consumer demand (+2.4pct.) and inventory buildup. And the fact that inventories are bound to contribute meaningfully to GDP will likely result in outcries that the underlying economy is not as strong as the headline figure is expected to show. Sure, and we agree to an extent (Gross Domestic Income has been weaker than GDP in 2011 meaning GDP could well be revised down in coming revisions), but then we should also remember that Q2-Q3 were better than the headlines suggested since inventories subtracted from total economic growth in these quarters (-0.28ppt and -1.35ppt, respectively). Overall, Real Final Sales (GDP less inventories) have risen 1.75 percent annualised since the trough in 2Q'09 and at an annual pace of 1.65 percent so far in 2011. Not impressive, but also not stalling - so this too is increasing like GDP.
Consensus expects GDP to increase at a 3 percent annualised rate, but yesterday's solid Durable Goods Orders report, in which Capital Goods Shipments (excl. defense and aircraft) rose 2.9 percent in December, could point to an upward suprise when GDP is released at 13:30 GMT.
