U.S. GDP Grew By Upwardly Revised 2.6% In Fourth Quarter
2014-03-28 14:51:26
While the Commerce Department released a report on Thursday showing stronger than previously estimated U.S. economic growth in the fourth quarter of 2013, the pace of growth still fell just short of economists' expectations.
The report said gross domestic product increased by an upwardly revised 2.6 percent in the fourth quarter compared to the previously estimated 2.4 percent growth. Economists had been expecting GDP to increase by 2.7 percent.
The Commerce Department said the upward revision primarily reflected a bigger than previously estimated increase in consumer spending.
Revised data showed that consumer spending increased by 3.3 percent in the fourth quarter compared to the previously reported 2.6 percent growth and the 2.0 percent increase seen in the third quarter.
However, the upward revision to consumer spending was partly offset by downward revisions to non-residential fixed investment and to private inventory investment.
Despite the upward revision to overall GDP growth in the fourth quarter, the increase still reflects a notable slowdown compared to the 4.1 percent growth seen in the third quarter.
The Commerce Department said the deceleration reflected a downturn in private inventory investment, a larger decrease in federal government spending, a downturn in residential fixed investment, and a deceleration in state and local government spending.
On the other hand, the report showed accelerations in consumer spending, exports, and non-residential fixed investment as well as a deceleration in imports, which are a subtraction in the calculation of GDP.
Noting that the fourth quarter data is old news, Peter Boockvar, managing director at the Lindsey Group, said, "Q1 GDP is expected to be around 2% with weather an obvious factor but to be followed by a rebound in Q2. The big question is whether the 2nd half sees the 3%+ growth that we used to enjoy."
With regard to inflation, the Commerce Department said its reading on core consumer prices, which exclude food and energy prices, rose by an unrevised 1.3 percent in the fourth quarter compared to 1.4 percent growth seen in the third quarter.