Big U.S. NGDP Upward Revision

For people who view NGDP (Nominal GDP) as important, the latest U.S. GDP report should be seen as very bullish. The headline volume number was upwardly revised from 2.8% to 3%, but the terms of trade adjusted was upwardly adjusted even more, from 2.4% to 2.8% and as domestic price inflation was upwardly adjusted from 0.8% to 1.1%, NGDP was upwardly adjusted from 3.2% to 3.9%.

Almost (yesterday's durable goods numbers were an anomaly) all data suggests that NGDP will increase even faster in the first quarter, reflecting both higher real growth and higher price inflation, driven by the rapid increase in money supply.