The U.S. GDP data moved into positive territory in the fourth quarter, confirming BMO Nesbitt Burns prescient call yesterday that the U.S. recession is over.

U.S. GDP came in at 0.2%, above the market consensus. BMO Nesbitt says that the headline concealed strong underlying details. “Businesses finished their inventory cuts, and this drag held back headline GDP. Final sales to domestic purchasers surged 3.2%. Consumer spending was up at an astonishing 5.4%, as everyone and their uncle bought a new car.”

But it notes that capital outlays are still a problem, dropping 12.8%. “A true, balanced economic recovery awaits a capital spending rebound, with yesterday’s brightening picture for capital goods orders hinting that this will happen sooner rather than later.”

CIBC World Markets is a little less sanguine about the report, “But beyond the inventory swing, the strength of this recovery is questionable, given the over dependence on vehicle sales and government spending, neither of which are sustainable at the Q4 pace.” Good ol’ Keynesian economics also had a hand in the rise, with government spending jumping 9.2%.

The CIBC killjoys also point out that while this recession might not meet the general definition of two successive quarters of contraction, it is still a recession, “For those who care about the technicalities, the failure of GDP to drop for two successive quarters does not mean that there wasn’t a 2001 recession, since the National Bureau of Economic Research relies on monthly, not quarterly data for that determination.”

CIBC says that the big drop in inventories bodes well for the end of the inventory drawdown, “which could see real GDP advance at a roughly 2% pace in Q1, stronger than our earlier 1.3% call.” Although it sees consumer spending weakening.

“This was a strong report and the environment is more supportive than anticipated for companies that are trying their hardest to cut costs to boost profits growth this year,” concludes BMO. “There is no inflation in sight. The Fed need not fear being overly stimulative with capital spending in decline and inflation nowhere to be found.”