With today’s GDP release, we can see that activity in the fourth quarter was somewhat less than first reported. Adding to the bad news, the housing contribution to GDP growth was -.3% in the fourth quarter. This is obviously disappointing given the trillions of dollars of QE, aimed directly at the housing market.
On the other hand, there was improvement in one important indicator. In the GDP report, the BEA gives us data on final sales to domestic purchasers (which measures final sales of goods sold to US consumers, regardless of where the product was produced) and final sales of domestic product (which measures final sales to US consumers of good made in the US). The difference between these two final demand series is a good proxy for the demand leakage of imports. In the fourth quarter, demand leakage continued to decline, now just above $450 billion. This is a discernible improvement from the end of 2011 where it was $600.