United States: Economic growth slows in Q4, down annually in 2013
January 30, 2014
In the fourth quarter, GDP expanded at a seasonally adjusted annualized rate (SAAR) of 3.2% according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 30 January. The print marked a slowdown relative to the revised 4.1% growth recorded in the third quarter (previously reported: +3.6%), but was roughly in line with market expectations. The fourth quarter expansion mainly reflects substantial growth in the export sector, as well as strong private consumption and investment.
On the domestic side, private consumption rose from a 2.0% increase in Q3 to a 3.3% expansion in Q4 and marked the highest level since Q2 2010. Non-residential fixed investment increased 3.8% (Q3: +4.8%). Residential fixed investment tumbled from a 10.3% rise in Q3 to a 9.8% contraction in Q4. Business inventories, which grew 1.7% and were the main factor behind Q3 growth, only increased 0.4% in Q4. Government spending contracted 4.9% in Q4, which was down from a modest 0.4% rise in Q3.
Exports growth surged to 11.4% in the fourth quarter (Q3: +3.9% SAAR) and imports rose 1.0% (Q3: +2.4% SAAR). Consequently, the external sector's net contribution to overall growth rebounded from 0.1 percentage points in the third quarter to 1.3 percentage points in the fourth.
In the full year 2013, GDP expanded 1.9%, which was down from the 2.8% increase tallied in 2012. FocusEconomics Consensus Forecast panelists had predicted a growth rate of 1.8% for 2013.
The Federal Reserve expects economic growth to range somewhere between 2.8% and 3.2% in 2014 and between 3.2% and 3.4% in 2015. FocusEconomics Consensus Forecast panelists are slightly less optimistic than the Fed and expect GDP to expand 2.8% in 2014, which is up 0.1 percentage points from last month's forecast. For 2015, the panel expects the economy to expand 3.0%.
Author: Carl Kelly, Economist