US GDP Expanded Stonger Than Expected

4Q09 GDP expanded +5.7% qoq (annualized) , compared with market expectation of +4.7%, from +2.25 in the previous quarter. The growth was the strongest since 3Q03 and was mainly driven by inventories which contributed 3.4% to the headline gain. It's a good news that inventory declined at a significantly lower than last quarter, rather than outright accumulation.

Final sales (GDP excluding inventory) grew +2.2% with business equipment spending surging a lucrative +13.3% at an annual rate.

Other components showed mixed performance. For instance, personal consumption rose +2% from +2.8% in 3Q09. The cash-for-clunkers program brought some durable goods orders to 3Q09 from 4Q09. Government spending dropped -0.2% in spite of the stimulus program while residential investment rose less than market anticipated (+5.7% ).

The robust growth seen in 4Q09 indicates US economic recovery is underway. We expect further growth in 1Q09 and a substantial share will continue to be contributed by inventory