MW: Fourth-quarter GDP growth chopped to 2.4% from 3.2%
Consumers did not spend as fast as initially reported
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The government on Friday chopped its estimate of U.S. growth in the waning months of 2013, mainly because consumers did not spend quite as much as originally reported.
The total value of all goods and services produced by the economy, known as gross domestic product, was lowered to a 2.4 % growth rate in the fourth quarter . Initially the Commerce Department had reported the U.S. grew 3.2%. GDP is revised twice after its initial release.
The revised GDP matched the forecast of economists surveyed by MarketWatch. Stock futures SPH4 -0.07% remained in the red.
The reduced growth estimate for the fourth quarter suggests the U.S. did not enter the new year with as much momentum as previously believed.
Still, the report contained pockets of strength such as a steady increase in consumer spending, higher business investment in equipment and a surge in American exports. If those trends persist, growth is likely to pick up in the months ahead, especially once the weather warms up after an unusually harsh winter, most economists believe.
“The U.S. economy grew less than previously thought in the closing quarter of last year, but the details of the report suggest that investment is growing at an increased rate and underlying demand continued to expand at a reassuringly robust rate, given the headwinds during the closing months of 2013,” said Chris Williamson, chief economist for Markit, in a note.
The lower growth figure stem from downward revisions in consumer spending, exports, inventory investment and government outlays.
The increase in consumer spending was trimmed to 2.6% from 3.3%, mostly because Americans spent less than initially calculated on big-ticket items such as autos, appliances and electronics. That’s still the fastest increase in seven quarters, however.
Exports, meanwhile rose 9.4% instead of 11.4%. And the increase in imports was revised up to 1.5% from 0.9%.
Inventories, for their part, still soared but not quite as high. They rose $117.4 billion and not $127.2 billion as previously reported.
Excluding inventories, final sales of American-made goods and services was trimmed to 2.3% from 2.8%.
Government spending fell a stiffer 5.6% instead of 4.9% because states and local governments actually cut outlays instead of increasing them.
Yet company spending on equipment — a key signal of improved business conditions — was revised up to show a 10.6% gain instead of 6.9%.
Inflation as measured by the PCE index was little changed, rising at a 1% annual pace or by 1.3% excluding food and energy.
Jeffry Bartash is a reporter for MarketWatch in Washington.
