The final read on Q4 US GDP found the government revising core PCE price growth higher and personal consumption lower, unwelcome developments, “stale” as the information most assuredly was.

The downward revision to personal consumption in Thursday’s release put the final print miles below initial market expectations.

Headed into the advance estimate, consensus expected personal consumption to rise almost 3%. The initially reported 2.1% was thus a meaningful disappointment in its own right. The second estimate found consumption revised down to 1.4%, and Thursday’s final reading was just 1%.

So, compared to consensus as it stood prior to the first read on Q4 GDP, the consumption impulse during 2022’s final quarter was just a third of expectations.

That’s notable. Of course, spending was very robust during an unseasonably warm January, and the overwhelming majority of the macro data for January and February suggested the Fed had much more work to do to quell inflation. Then came the bank failures. Now, no one knows quite what to think.

Core PCE was 4.4% in the final read for Q4. That was (minor) insult to injury following a sizable upward revision in the second estimate, when core price growth was revised up to 4.3% from the originally reported 3.9%.

Overall, the economy expanded at a 2.6% pace in Q4, down from 2.9% in the originally-reported advance read. For what it’s worth (so, nothing), consensus expected no change from any of the second estimates.

Meanwhile, jobless claims were benign — again. At 198,000, initial claims were up slightly from the prior week, but until further notice, weekly claims are a footnote. These readings are among the lowest in history. And it’s just week after week after week of them. Continuing claims dropped, and were below estimates.

I’d note, in closing, that it’s pretty difficult to square the SEP with consensus and also with what’s likely to be a robust read on Q1 2023 GDP. Consider:

• As of March 24, the Atlanta Fed’s GDPNow model for real GDP growth in the first quarter stood at 3.2%. Consensus for the full year is around 1%.
• But the March SEP projection for this year was just 0.4%.

That’s a pretty big disparity. The Fed seems to think a significant contraction at some point between Q2 and Q4 is likely.