The federal government substantially lowered its estimate of how much the U.S. economy grew in the fourth quarter to reflect more comprehensive data showing consumer spending grew more slowly than first thought.
Real gross domestic product - the output of goods and services produced by labor and property located in the United States adjusted for inflation - increased at an annual rate of 2.4 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the "second" estimate released Friday by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.1 percent. Friday's GDP estimate is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 3.2 percent. With this second estimate for the fourth quarter, an increase in personal consumption expenditures (PCE) was smaller than previously estimated.
The second estimate of the fourth-quarter percent change in real GDP is 0.8 percentage point, or $32.7 billion, less than the advance estimate issued last month, primarily reflecting downward revisions to personal consumption expenditures (PCE), to private inventory investment, to exports, and to state and local government spending that were partly offset by an upward revision to nonresidential fixed investment. Slow growth in the fourth quarter also reflected a deceleration in private inventory investment, a larger decrease in federal government spending, and downturns in residential fixed investment and in state and local government spending that were partly offset by accelerations in exports, in PCE, and in nonresidential fixed investment and a deceleration in imports.
BEA now estimates that real GDP increased 1.9 percent in 2013, compared with 2.8 percent in 2012. When expressed in current dollars, current-dollar GDP increased 3.4 percent compared with an increase of 4.6 percent in 2012. The deceleration in growth in 2013 primarily reflected slower growth in nonresidential fixed investment, a larger decrease in federal government spending, and decelerations in PCE and in exports that were partly offset by a deceleration in imports and a smaller decrease in state and local government spending.
The price index for gross domestic purchases, an indicator of the inflation rate, increased 1.2 percent in 2013, compared with an increase of 1.7 percent in 2012.
