The BEA’s second estimate of fourth quarter 2013 U.S. GDP is out.
Q4 GDP growth was revised down to 2.4% at an annualized pace from the BEA’s initial 3.2% estimate published a month ago. Personal consumption growth was revised down to 2.6% from 3.3%. Market economists were looking for smaller downward revisions to 2.5% and 2.9%, respectively.
The GDP price index, however, was revised up to 1.6% from 1.3%, and the core PCE deflator was revised up to 1.3% from 1.1%. Economists had predicted no revisions to either number.
Growth in business investment spending was revised to 7.3% from the initial 3.8% estimate, and in particular, equipment investment growth was revised to 10.6% from 6.9%.
“The government drag was about 0.1 percentage points more than initially estimated because of weaker spending across state and local governments,” says Neil Dutta, head of U.S. economics at Renaissance Macro.
“It is hard to see this government drag persisting, particularly with state and local governments in their best fiscal position in years. Stepping back, in the second half of 2013, real GDP expanded a respectable 3.3% annualized, while final sales grew 2.4%. Going forward, we expect weaker inventory investment and stronger final sales, narrowing the gap.”
Below is a summary of the data from the BEA:
Real gross domestic product — the output of goods and services produced by labour and property located in the United States — increased at an annual rate of 2.4 per cent 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 per cent.
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 per cent. 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.
Markets are little changed immediately following the release.
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