US Q4 GDP Revised Down To 2.4% From 3.2% On Lower Consumer Spending

International Business Times ^ | 02/28/2014 | By Moran Zhang

[SeekAndFind]

The U.S. economy grew at a 2.4 percent annualized rate in the fourth quarter, the Commerce Department said Friday, revising down its initial estimate of a 3.2 percent increase in the nation's economic performance.

The drop in fourth-quarter gross domestic product growth was largely due to a smaller-than-expected boost from Americans buying bit-ticket items such as autos.

Consumer spending, which accounts for 70 percent of the U.S. economy, slowed to a 2.6 percent rise from 3.3 percent in the third quarter. Export, inventory accumulation and government spending also contributed to the downward revision in GDP.

Capital Economics' Paul Ashworth now expects the first-quarter 2014 GDP growth to be close to 2.0 percent. "Once the weather effects begin to unwind in the second quarter, however, we would anticipate a pick-up in GDP growth to nearer 3 percent over the remaining three quarters of this year," Ashworth said in a note.

The U.S. Federal Reserve, which has been trimming the amount of money it is injecting into the economy through monthly bond purchases, views the recent soft patch as a cold weather-related temporary phase. Fed Chair Janet Yellen told lawmakers Thursday that it will take a "significant" change in the outlook for the economy to prompt the central bank to consider pausing or changing the pace of tapering.

[KoRn]

Isn’t that a fairly large difference for a GDP revision?

[cicero2k]

When is the last time they raised a previous estimate after the period was over?

Hmm?

[Right Brother]

"Once the weather effects begin to unwind in the second quarter, however, we would anticipate a pick-up in GDP growth to nearer 3 percent over the remaining three quarters of this year," Ashworth said in a note.

Yep, that darn weather will get you every time. Sure has been a lot of weather influenced economics since 2008.

[SeekAndFind]

RE: Isn’t that a fairly large difference for a GDP revision?

Yes, HUGE, HUGE difference. This simply means the economy has been very sluggish throughout 2013.

[MNGal]

They forgot to mention in the headline that this was “unexpected.”

[tellw]

That’s off the mark by trillions of GDP right?

[MNlurker]

Don’t remember the weather being all that terrible in Q4...

[EBH]

I heard an interesting factoid yesterday...

People getting tax refunds this year plan to use the money to pay on existing loans or credit card bills.

I found that interesting in that they are NOT doing what they normally do with the ‘extra’ windfall from the government, which is spend it on consumer goods. So the money won’t be having any influence on the economy.

It also seems to me to indicate a real lack of confidence.

[11th Commandment]

This is a large revision... however, the original estimate was BS. The article states, " Export, inventory accumulation ... contributed to the downward revision in GDP.

This risk was known in October. Many thought GDP would land at 2% or below for Q4 yet the regime published 3.2%.

[SeekAndFind]

RE: That’s off the mark by trillions of GDP right?

Off the top of my head, here’s how I would calculate it roughly ( and economists out there can correct me if I am wrong ).

Let’s say 2012 GDP was $15 Trillion. Forbes tells us that From the fourth quarter of 2012 to the fourth quarter of 2013 real GDP gained 2.5%.

2.5% of $15 trillion is $0.375 trillion or $375 Billion dollars.

So no, it is off the mark by just a few hundred billion dollars. That’s still a huge amount of money. We haven’t been thinking in terms of Billions for the longest time.

[Right Brother]

Excessive credit card purchasing is creating a false economic illusion. The banking cartels are lining their pockets with 12-18% interest (not to mention the up-front 2-4% merchant fee) while the economic viability of the cash-strapped borrower is diminishing.

[mykroar]

And correct me if I'm wrong, but 3% is nothing to write home about anyways. And they're guessing we might get that high later this year - after another 2% in first quarter.

[11th Commandment]

OH, but consumer debt is up... haven't you heard the good news from the same people who revised GDP 80 points lower??? (yes sarcasm). The consumer debt is also another false report because the Obama regime now includes student debt.

[PGalt]

By DEFUNDING socialist collectives, you are FUNDING/strengthening your own position/survival.

DEFUND/DISMANTLE

FED up?

IDP - Individual’s Defended Position / FReedom BUMP!

[11th Commandment]

3% would be a good results IF the recovery had been as historically robust compared to over recoveries- BUT it wasn't- not even close.

In my humble opinion, looking at the data, the only thing helping the economy if fracking. There is really nothing else of new value being added to productivity...

[Red Badger]

...revising down its initial estimate of a 3.2 percent increase in the nation's economic performance.

They danced all over the media when that 3.2 was announced. Now you won't hear a peep..................

[Red Badger]

I did my taxes last night. My refund?

$5.00..............................

To celebrate, I guess I’ll buy a meal at Hardee’s.............

[massgopguy]

Don’t forget the economic effect of Easter being early or late.

[John W]

And Good Friday falling on a Friday again screwing everything up.