US economy expanded at 2.4 percent in 4th quarter

[DonViejo]

Source: ASSOCIATED PRESS

WASHINGTON (AP) — The U.S. economy grew at a 2.4 percent annual rate in the October-December quarter, significantly slower than first thought, reflecting slower consumer spending than initially estimated.

The severe winter weather is expected to slow growth further in the current quarter, but as the snows melt, economists believe growth will rebound.

The Commerce Department says the downward revision from an initial 3.2 percent estimate for the fourth quarter primarily reflected a downgrade in consumer spending, which is now estimated to have expanded at 2.6 percent rate, still the best showing in nearly two years. But it is below the previous 3.3 percent estimate.

For all of 2013, the economy grew at a lackluster 1.9 percent, but analysts expect growth will rebound in 2014, possibly as high as 3 percent.

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Read more: http://www.salon.com/2014/02/28/us_economy_expanded_at_2_4_percent_in_4th_quarter/

[mahatmakanejeeves]

1. GDP Cut to 2.4% from 3.2% in Fourth Quarter

GDP Cut to 2.4% from 3.2% in Fourth Quarter

By Jeffrey Sparshott And Ben Leubsdorf

Updated Feb. 28, 2014 9:24 a.m. ET

WASHINGTON—The U.S. economy expanded at a sharply slower pace in late 2013 than initially estimated, a sign of moderating growth amid bad weather and softer overseas demand for American products. ... Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 2.4% in the final quarter of the year, the Commerce Department said Friday, down from an initial reading of 3.2%. ... However, financial markets didn't budge much after the data was released as economists surveyed by Dow Jones had forecast 2.4% growth.

The U.S. economy surged in the third quarter of the year, expanding at a 4.1% pace, and the initial reading for the fourth quarter had raised hopes for stronger growth, faster job creation and better wages in 2014.

Instead, the economy appears to be reverting to its postrecession path, with overall growth remaining stubbornly close to 2%. Meanwhile, other recent gauges of consumer spending, job creation, factory output and the housing market all have flashed warnings signs. While heavy winter storms may have depressed or delayed some activity, the poor numbers have raised concerns about the strength of the economy in the early part of the year.

Friday's report showed consumers continued to drive growth, though not as much as initially thought. Personal consumption expenditures, adjusted for inflation, rose 2.6% in the quarter, below the initial 3.3% estimate.
....

Write to Jeffrey Sparshott at [e-mail] and Ben Leubsdorf at [e-mail]

News Release from the Bureau of Economic Analysis

GROSS DOMESTIC PRODUCT: FOURTH QUARTER AND ANNUAL 2013 (SECOND ESTIMATE)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.4 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 3.2 percent. With this second estimate for the fourth quarter, an increase in personal consumption expenditures (PCE) was smaller than previously estimated (see "Revisions" on page 3).

The increase in real GDP in the fourth quarter primarily reflected positive contributions from PCE, exports, nonresidential fixed investment, and private inventory investment that were partly offset by negative contributions from federal government spending, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter reflected a deceleration in private inventory investment, a larger decrease in federal government spending, and downturns in residential fixed investment and in state and local government spending that were partly offset by accelerations in exports, in PCE, and in nonresidential fixed investment and a deceleration in imports.

[hughee99]

2. It seems like I've read this story before...

analysts overestimated growth, the actual numbers are being revised down by 25% from the projections, but those same analysts are optimistic that things are getting better and project the next month/quarter/year will be about what they projected the last month/quarter/year to be.

[Auntie Bush]

3. Maybe if people earned more money they'd spend more and get the economy going.

Seems simple!