Friday, February 27, 2015

4Q 2014 US GDP revised down to 2.2 due to spike in imports, US business stockpiling slowed. 1Q 2015 expected slow due to winter-AP

2/27/15, "U.S. economic growth in fourth quarter revised down to 2.2%," AP via LA Times

"The U.S. economy slowed more sharply in the final three months of the year than initial estimates, reflecting weaker business stockpiling and a bigger trade deficit.

The Commerce Department said Friday that the economy as measured by the gross domestic product grew at an annual rate of 2.2% in the October-December quarter, weaker than the 2.6% first estimated last month. It marked a major slowdown from the third quarter, which had been the strongest growth in 11 years....

For all of 2014, the economy expanded 2.4%, up slightly from 2.2% growth in 2013.

Consumer spending, which accounts for 70% of economic activity, was a bright spot in the fourth quarter. It expanded at an annual rate of 4.2%, down slightly from the first estimate of 4.3% growth but still the best showing since the first quarter of 2006.

Friday's report was the second of three estimates for fourth quarter GDP, the broadest measure of the economy's total output of goods and services....

The downward revision stemmed largely from slower stockpiling by businesses. Last month, the rise in inventories was estimated to have added 0.8%age points to fourth quarter growth. But that was lowered to a contribution of just 0.1%age point in the new estimate. The change, however, will likely translate into stronger growth in the current quarter because businesses will not have to work down an overhang of unsold goods.

Trade also weighed more heavily on growth than first thought, subtracting 1.2%age points as imports grew much more strongly than first thought. That could be a reflection of the rising value of the dollar, which makes imported products cheaper for U.S. consumers.

Many analysts believe 2015 will start slowly, in part reflecting the disruptions caused by a rough winter. However, it's unlikely to be as bad as the first quarter of 2014, when heavy snow and cold contributed to a 2.1% plunge in growth in the first quarter of 2014."...

US Quarterly GDP, 2011-2014:

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