US economy slows but outlook positive
CONSUMER SPENDING ROBUST; BUSINESS INVESTMENT REVISED UP
U S economic growth braked more sharply than initially thought in the fourth quarter amid a slow pace of stock accumulation by businesses and a wider trade deficit, but the underlying fundamentals remained solid.
Gross domestic product expanded at a 2.2 per cent annual pace, revised down from the 2.6 per cent pace estimated last month, the Commerce Department said yesterday. The economy grew at a 5 per cent rate in the third quarter.
With consumer spending accelerating at its quickest pace since the first quarter of 2006 and sturdy gains in other measures of domestic demand, the slowdown in growth is likely to be temporary.
Growth in consumer spending, which accounts for more than two-thirds of US economic activity, was revised down by one-tenth of a percentage point to a 4.2 per cent pace in the fourth quarter, still the fastest since the first quarter of 2006.
A tightening labour market and lower gasoline prices are likely to keep supporting domestic demand and help the economy navigate a turbulent global economy.
Business spending on equipment was revised to show it rising at a 0.9 per cent rate instead of the previously reported 1.9 per cent contraction.
A first-quarter acceleration is now in the cards, with data on Thursday showing a rebound in business spending intentions in January after four straight months of declines.
Growth in final sales to domestic purchasers, a key measure of domestic demand, was revised to a 3.2 per cent pace from the previous 2.8 per cent rate.
Revised GDP
2.2 % Pace of annual GDP revised down from 2.6 per cent.