Fourth quarter GDP growth was revised down but the good news is that the softer growth was mainly due to a lower estimate for inventory investment. The economy grew 2.2 percent in the fourth quarter compared to the advance estimate of 2.6 percent. Expectations were for 2.1 percent.

Final sales of domestic product were revised up to 2.1 percent from the initial estimate of 1.8 percent. Final sales to domestic purchasers were revised up to 3.2 percent from 2.8 percent.

With the second estimate for the fourth quarter, inventory growth was revised down to $88.4 billion from the advance estimate of $113.1 billion. Turning to components of final sales, the two slightly notable revisions were for net exports and nonresidential fixed investment. Net exports were revised down to minus $476.4 billion from minus $471 billion. Both exports and imports were revised up but imports more so. The upward revision in nonresidential investment largely was in intellectual property but there also were higher estimates for structures and equipment.

On the price front, the chain-weighted price index was revised up marginally to 0.1 percent annualized, compared to the advance estimate of no change. The core chain index, excluding food and energy, was unrevised from the initial estimate of 0.7 percent.  

Overall, the GDP revision was more favorable than the headline number suggests since the downward revision was largely in inventories while final sales were revised up.