Real U.S. gross domestic product (GDP) growth in the fourth quarter came in at a 1.0% seasonally adjusted annual rate (SAAR), according to the Commerce Department's second estimate, issued Friday morning. The initial estimate had GDP growth at 0.7%, and economists had expected the second revision to come in at 0.4%, according to Bloomberg. Real GDP increased 2.0% in the third quarter. 

Real GDP increased 2.4% in 2015, comparing 2015's annual level to 2014's, the same rate as in the previous year. Current-dollar GDP rose $594.8 billion to $17.9 trillion in 2015, an increase of 3.4% following an increase of 4.1% ($684.9 billion) in 2014. Comparing the fourth quarter of 2015 to the fourth quarter of 2014, real GDP increased 1.9%, compared to 2.5% the previous year.

Better than Forecast

The second fourth-quarter growth estimate surpassed the high end of the range of estimates (0.2% to 0.8%). 

The sources of growth are less encouraging than the headline number, according to High Frequency Economics' chief U.S. economist Jim O'Sullivan. Economists who had expected a downward revision saw inventories dragging growth down more than it did; the figure was revised up to -0.1% from -0.5%. Real final sales, which grew at a 1.2% annual rate, were not revised. Real domestic final sales were revised to 1.6% from 1.4%. 

Core PCE prices were revised up 0.1 percentage point to a 1.3% annual rate. The overall price index was revised to 0.9% from 0.8%.

Nominal wage income growth was revised down to a 4.3% annual rate from 4.6%. 

The Federal Reserve Bank of Atlanta's GDPNow tracker has real first-quarter GDP growth at 2.5%.

Inflation, Stimulus Expectations Rising

Friday's GDP revision follows Monday's announcement of 2.2% annual core inflation in January, which was also better than expected and signals a sustained recovery in consumer spending.

On Wednesday, the IMF issued a call for G20 members, who have gathered in Shanghai for a summit, to coordinate an international stimulus program. The report bolstered markets, which continue to rise Friday morning, but met with skepticism from world leaders including German finance minister Wolfgang Schäuble, who called it a "distraction."

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