MORE ON Q4 GDP

Q3 saw a boost to GDP due to inventories so the Q4 reversal must be seen in that light. Monday’s personal income & spending report gave details on how ’10 ended. Real personal consumer expenditure (PCE) spending rose 0.4% MoM in Dec but real personal disposable income was up only up 0.1%. How? Because consumers reduced savings to 5.3% from 5.5%. Absent that PCE would have been 0.1% not 0.4%.