GDP Revised Higher, Measure of Inflation Revised Lower, Jobless Claims Fall Again

- Final 4Q GDP rose 2.5% versus estimates of a 2.2% gain and a prior estimate of 2.2%.
- Final 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% gain and a prior estimate of a 4.2% increase.
- Final 4Q GDP Price Index rose 1.7% versus estimates of a 1.7% gain and a prior estimate of a 1.7% increase.
- Final 4Q Core PCE rose 1.8% versus estimates of a 1.9% gain and a prior estimate of a 1.9% increase.
- Initial Jobless Claims for last week fell to 308K versus estimates of 320K and 318K the prior week.
- Continuing Claims rose to 2527K versus estimates of 2518K and 2495K prior.

BOTTOM LINE: The US economy grew at an annual rate of 2.5% in the fourth quarter, faster than previously thought, Bloomberg reported. As well, a measure of inflation closely watched by the Fed rose less than forecasts. For all of last year, the US economy rose 3.3% versus 3.2% in 2005 and the long-term average of 3.1%. Growth will likely come in around 2% this quarter before bouncing back to more average rates through year-end.

The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest since January, suggesting the labor market remains very healthy, Bloomberg reported. The four-week average of jobless claims fell to 316,750 from 324,000 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, remained steady at 1.9%. I continue to believe the labor market will remain healthy over the intermediate-term without generating significant unit labor cost increases.