Friday’s GDP print came in better than expected, gaining 0.2% M/M and ending Q4 on a positive note…

… despite being down 0.2% versus Q3, driven almost entirely by an inventory drawdown concentrated in manufacturing and wholesale trade…

… which drove non-farm inventories into the red on the year - the first negative print since 2020.

That offset higher exports and fixed capital formation, which added another ~1% in Q4 - marking the fourth straight sequential gain…

… driven primarily by government investment in weapons systems.

Combine that with a 0.4% increase in household consumption (0.6% on a per capita basis due to population decline)…

… and the final domestic demand picture improved versus the prior quarter.

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