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Tuesday, March 27, 2012 - 14:58

US Data Prev: Q4 2011 GDP To Be Revised Up On Health Spending

WASHINGTON (MNI) - Q4 2011 GDP is expected to be revised slightly higher in the Commerce Department's final estimate Thursday, as healthcare spending appears to be stronger than initially thought.

Several economists pointed to a fourth quarter service industry survey released March 8 by the Census Bureau that showed higher than expected spending in healthcare services.

The report said current dollar healthcare and social assistance revenue increased 3.1% from the third quarter.

Meanwhile, the second revision to GDP actually revised healthcare spending down to a 2.8% rise, from a 4.1% increase initially reported.

Jay Feldman, a research analyst with Credit Suisse said in a phone interview with MNI: "There could be an upward revision to health care spending suggested by the quarterly services survey, but no other significant revisions are expected."

Ryan Wang, an economist at HSBC who is forecasting 3.2% GDP growth, agreed, telling MNI this new data should have an impact, but the other aspects of GDP have generally all been accounted for.

According to a survey of economists by MNI, the final revision to Q4 GDP is expected to show 3.1% growth, opposed to the 3% growth published in the second estimate.

The most recent GDP report showed overall personal consumption grew 2.1% in the fourth quarter, and services consumption rose 0.7%.

Mike Englund, chief economist at Action Economics, sees a 3.4% increase and in a phone interview highlighted possible revisions to inventory equipment as well as services.

"The last two quarters have seen some oscillations, and we see this bounce to be led by services. We also are looking for a bounce in inventory equipment as well," Englund said.

The third estimate of 2011 Q4 GDP will be released Thursday at 8:30 a.m. ET by the Department of Commerce.

-- Josh Newell is a Washington reporter for Need to Know News

** MNI Washington Bureau: 202-371-2121 **


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