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BofA Merrill Lynch Global Research – A US Economics Report – Wednesday, 30 January 2013

Fade the negative GDP headline

GDP contracted 0.1% in Q4, significantly below expectations. However, we advise fading the headline number given distortions in the data. Growth was dragged down by a sharp contraction in government defense spending and inventory accumulation, which combined subtracted 2.6pp from growth. Outside of these two very volatile components, underlying growth improved with a solid gain in business investment. We believe today’s report suggests upside risk to our forecast of 1.0% for Q1 GDP.

 

 

Read the full report here.