US GDP Growth Slows in Q4


The United States economy expanded at an annual rate of 2.6 percent in the fourth quarter of 2014, according to the "advance" estimate. Fastest pace of consumer spending since 2006 was not enough to offset weak business spending and a wider trade deficit.

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an upturn in private inventory investment and an acceleration in PCE.

Real personal consumption expenditures increased 4.3 percent in the fourth quarter, compared with an increase of 3.2 percent in the third. 

Durable goods increased 7.4 percent, compared with an increase of 9.2 percent. Nondurable goods increased 4.4 percent, compared with an increase of 2.5 percent. Services increased 3.7 percent, compared with an increase of 2.5 percent.

Real nonresidential fixed investment increased 1.9 percent in the fourth quarter, compared with an increase of 8.9 percent in the third. Investment in nonresidential structures increased 2.6 percent, compared with an increase of 4.8 percent. Investment in equipment decreased 1.9 percent, in contrast to an increase of 11.0 percent.  Investment in intellectual property products increased 7.1 percent, compared with an increase of 8.8 percent. Real residential fixed investment increased 4.1 percent, compared with an increase of 3.2 percent.

Real exports of goods and services increased 2.8 percent in the fourth quarter, compared with an increase of 4.5 percent in the third.  Real imports of goods and services increased 8.9 percent, in contrast to a decrease of 0.9 percent.

Real federal government consumption expenditures and gross investment decreased 7.5 percent in the fourth quarter, in contrast to an increase of 9.9 percent in the third. National defense decreased 12.5 percent, in contrast to an increase of 16.0 percent. Nondefense increased 1.7 percent, compared with an increase of 0.4 percent. Real state and local government consumption expenditures and gross investment increased 1.3 percent, compared with an increase of 1.1 percent.

The change in real private inventories added 0.82 percentage point to the fourth-quarter change in real GDP after subtracting 0.03 percentage point from the third-quarter change. Private businesses increased inventories $113.1 billion in the fourth quarter, following increases of $82.2 billion in the third quarter and $84.8 billion in the second.


BEA | anna@tradingeconomics.com
1/30/2015 1:47:36 PM