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The business situation.

the BUSINESS SITUATION

PRELIMINARY estimates show that real GNP--a measure of production--increased at an annual rate of 2 percent in the fourth quarter of 1988, the same rate of increase shown in the advance estimates issued a month ago (see table 1 on page 16). The fourth-quarter increase in real gross domestic purchases--a measure of demand--was revised up 1/2 percentage point to 3 percent at an annual rate. Increases in both the GNP price index (fixed weights) and the gross domestic purchases price index (fixed weights) were essentially unrevised at 4 percent at an annual rate.

Revisions in the major components of real GNP were small. The largest upward revision was in personal consumption expenditures ($4.1 billion), and the largest downward revisions were in net exports ($2.6 billion) and fixed investment ($2.1 billion). Within net exports, both exports and imports were revised up substantially ($6.0 billion and $8.5 billion, respectively).

The broad picture of the economy, as sketched in the last month's "Business Situation," was not altered by the revisions. All of the major components of real GNP, except government purchases, did less well in the fourth quarter than in the third: Personal consumption expenditures increased less than in the third quarter, fixed investment and inventory investment decreased after increases, and net exports decreased more than in the third quarter. Within net exports, however, the preliminary estimates show that increases in nonagricultural exports and in nonpetroleum imports were about as strong in the fourth quarter as in the third; the advance estimates for both had shown much smaller increases in the fourth quarter.
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Title Annotation:fourth quarter of 1988
Publication:Survey of Current Business
Date:Feb 1, 1989
Words:269
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