Consumers are powering the US economy

Consumers are still driving the US economy.

The advance estimate of gross domestic product (GDP) for the fourth quarter was 0.7%, versus the forecast for 0.8%.

The data from the Commerce Department out Friday also showed that consumer spending rose 3.1% in 2015, the most in 10 years.

Consumer spending makes up more than two-thirds of GDP, and so this indicates that consumers were still in the front seat of economic growth even though it slowed late last year.

Growth in the fourth quarter was held back in part by an industrial slowdown and weaker exports, induced by a strengthening dollar, weak global demand, and slumping commodity prices. Business fixed-investment spending fell at a 1.8% rate, the first decline in three years.

The economy as a whole grew 2.4% in 2015, the same as the prior year.

“For the Fed, these numbers don’t change much,” wrote Pantheon Macroeconomics’ Ian Shepherdson to clients. “It has been clear for a while that the first estimate of Q4 GDP would be sluggish, but the unreliability of these data

means the primacy of the labour market data in the Fed’s thinking is unchallenged.”

The fourth-quarter and 2015 numbers will be revised twice again, in February and March.

In the fourth quarter, personal consumption rose 2.2%, stronger than the expectation for 1.8%.

We also got personal-consumption expenditures, the Fed’s preferred measure of inflation that gauges the prices paid for everything except volatile energy-related items. It came in at 1.2%, in line with expectations.

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