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The business situation.

REVISED (45-day) estimates show that real GNP increased at an annual rate of 5 percent in the fourth quarter of 1984. Preliminary (15-day) estimates, published a month ago, had shown a 4-percent increase. Inflation, as measured by the GNP fixed-weighted price index, remained virtually unrevised at a 3-1/2-percent annual rate of increase (table 1).

The $3-1/2 billion upward revision in real GNP can be traced to large, but partly offsetting, revisions in some of the major components. The upward revisions were in net exports and change in business inventories. Net exports were revised up $5 billion, mainly due to an upward revision in merchandise exports and a downward revision in merchandise imports. Inventory investment was revised up $2-1/2 billion, largely due to upward revisions in manufacturing, wholesale trade, and retail trade. The downward revision of $2-1/2 billion in nonresidential fixed investment was in producers' durable equipment, mainly computers. In personal consumption expenditures (PCE), a downward revision in nondurables more than offset upward revisions in services and durables. In residential investment, the downward revision was mainly in multifamily structures. In government, a downward revision in State and local purchases (construction) a little more than offset an upward revision in Federal purchases (largely defense).

Overall, the picture of the economy, as described in the last month's "Business Situation," did not alter much. The fourth-quarter increase in real GNP was accounted for by a sharp increase in final sales that more than offset a decline in business inventory investment. Within final sales, all major components increased except residential construction. Net exports accounted for one-half of the increase in final sales, and PCE a little more than one-fourth.
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Title Annotation:fourth quarter 1984
Publication:Survey of Current Business
Date:Feb 1, 1985
Words:278
Previous Article:Survey of current business.
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