· US Second quarter GDP was revised up from an initially reported 5.7% annual rate of increase to a 5.9% pace of expansion. Much of the upward revision was due to an increase in the contribution from inventories, which went from accounting for 3.4% points of last quarter's increase to a 3.9% point contribution. The pace of final sales in Q4 was revised down from 2.2% to 1.9%. The stronger reported inventory number last quarter means it is less likely we can expect another substantial contribution to growth in this quarter from inventories. Feroli
· Existing home sales plunged for the second consecutive month in January, falling 7.2%m/m to a 5.05 million annualized pace. This follows a huge 16.2% fall in December, and home sales are now down 22.2% in just two months, the largest drop
on record. This sudden collapse in sales completely reverses a dramatic increase in
late 2009. The large rise and fall of sales in recent months is probably related to the
new homebuyer tax credit, whose expected expiration at the end of November could
have pushed sales into earlier months. The tax credit was ultimately extended and
expanded in early November, and it’s possible we could see another bump in sales
when the tax credit expires in mid-2010. Reinhart
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