This morning’s downward revision of the fourth-quarter GDP number, from an already less-than-stellar 2.4 percent down to 2.2 percent, might lead one to believe the economic outlook is weak.

But a look inside the numbers shows why things aren’t actually so bad, and why we believe the economy is poised for a stronger spring.

The headline number was dragged down by two major categories: There was a 10 percent jump in imports, and a 15.4 percent drop in defense outlays. Although imports don’t help GDP – quite the opposite, they subtract from it – they are often a sign of consumer demand. For the defense sector, spending is often volatile, and doesn’t say much about the economy at large, said Bob Hughes, senior research fellow at the American Institute for Economic Research.

Hughes is the lead author of Business Conditions Monthly, AIER’s regular look at the health of the economy, and in the new edition published earlier this week, he made the point that private domestic demand has actually been quite healthy. That trend, he said, continues in this morning’s GDP report.

Private domestic demand was actually revised upward for the fourth quarter, from 4.3 percent to 4.5 percent. That’s on the strength of consumer spending, housing, and business investment that is showing positive growth, he said.

It’s the third quarter in a row, and the fourth in the last fifth, showing private domestic demand growth above 3.5 percent, he said. It’s a healthy pace for “organic growth” of the U.S. economy, he said.