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Fourth-Quarter U.S. GDP Growth Cut to 2.4 Percent

Fourth-Quarter U.S. GDP Growth Cut to 2.4 Percent (Reuters)

The U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports fell below initially estimates, suggesting a loss of economic momentum heading into 2014. Gross domestic product (GDP) expanded at a 2.4 percent annual rate, the Commerce Department reported on Friday. That marked a sharp drop from the 3.2 percent pace reported last month and the 4.1 percent logged in the third quarter. Economists polled by Reuters had expected growth would be cut to a 2.5 percent pace. It is not unusual for the government to make revisions to GDP numbers, as it does not have complete data when it makes its initial estimates. In fact, the latest figures will be subject to revisions next month as more information is received. The revision left GDP just above the economy’s potential growth trend, which analysts put somewhere between 2 percent and 2.3 percent. Even with the revision, the second-half growth pace hit 3.3 percent and jumped from 1.8 percent in the first six months of 2013. Consumer spending accounted for a large chunk of the revision, after retail sales in November and December came in weaker than assumed.

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The U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports fell below initially estimates, suggesting a loss of economic momentum heading into 2014.

archive

Fourth-Quarter U.S. GDP Growth Cut to 2.4 Percent

The U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports fell below initially estimates, suggesting a loss of economic momentum heading into 2014.

Fourth-Quarter U.S. GDP Growth Cut to 2.4 Percent (Reuters)

The U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports fell below initially estimates, suggesting a loss of economic momentum heading into 2014. Gross domestic product (GDP) expanded at a 2.4 percent annual rate, the Commerce Department reported on Friday. That marked a sharp drop from the 3.2 percent pace reported last month and the 4.1 percent logged in the third quarter. Economists polled by Reuters had expected growth would be cut to a 2.5 percent pace. It is not unusual for the government to make revisions to GDP numbers, as it does not have complete data when it makes its initial estimates. In fact, the latest figures will be subject to revisions next month as more information is received. The revision left GDP just above the economy’s potential growth trend, which analysts put somewhere between 2 percent and 2.3 percent. Even with the revision, the second-half growth pace hit 3.3 percent and jumped from 1.8 percent in the first six months of 2013. Consumer spending accounted for a large chunk of the revision, after retail sales in November and December came in weaker than assumed.

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Written By

Paul Dykewicz is the editorial director of the Financial Publications Group at Eagle Publishing Inc., www.eaglepub.com, of Washington, D.C. Eagle publishes five free, e-letters, 10 weekly trading services and five monthly investment newsletters, Forecasts & Strategies, Successful Investing, Cash Machine, Growth & Dividend Report and The Alpha Investor Letter. He also is the editor of Eagle Daily Investor and the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain."

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