US Economy Expands 2.2% in Q4


The United States economy advanced an annualized 2.2 percent in the fourth quarter of 2014, unrevised from last month's estimate. While increases in exports and in personal consumption expenditures were larger than previously estimated, the change in private inventories was smaller.

The increase in real GDP in the fourth quarter reflected positive contributions from PCE, nonresidential fixed investment, exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending and private inventory investment. 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, a deceleration in nonresidential fixed investment, and a larger decrease in private inventory investment that were partly offset by accelerations in PCE and in state and local government spending.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 0.1 percent in the fourth quarter, the same decrease as in the second estimate; this index increased 1.4 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.7 percent, compared with an increase of 1.6 percent.

Real personal consumption expenditures increased 4.4 percent in the fourth quarter, compared with an increase of 3.2 percent in the third. Durable goods increased 6.2 percent, compared with an increase of 9.2 percent. Nondurable goods increased 4.1 percent, compared with an increase of 2.5 percent. Services increased 4.3 percent, compared with an increase of 2.5 percent.

Real nonresidential fixed investment increased 4.7 percent in the fourth quarter, compared with an increase of 8.9 percent in the third.  Investment in nonresidential structures increased 5.9 percent, compared with an increase of 4.8 percent.  Investment in equipment increased 0.6 percent, compared with an increase of 11.0 percent.  Investment in intellectual property products increased 10.3 percent, compared with an increase of 8.8 percent.  Real residential fixed investment increased 3.8 percent, compared with an increase of 3.2 percent.
Real exports of goods and services increased 4.5 percent in the fourth quarter, the same increase as in the third quarter. Real imports of goods and services increased 10.4 percent, in contrast to a decrease of 0.9 percent.

Real federal government consumption expenditures and gross investment decreased 7.3 percent in the fourth quarter, in contrast to an increase of 9.9 percent in the third.  National defense decreased 12.2 percent, in contrast to an increase of 16.0 percent.  Nondefense increased 1.5 percent, compared with an increase of 0.4 percent.  Real state and local government consumption expenditures and gross investment increased 1.6 percent, compared with an increase of 1.1 percent.

The change in real private inventories subtracted 0.10 percentage point from the fourth-quarter change in real GDP after subtracting 0.03 percentage point from the third-quarter change.  Private businesses increased inventories $80.0 billion in the fourth quarter, following increases of $82.2 billion in the third quarter and $84.8 billion in the second.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.3 percent in the fourth quarter, compared with an increase of 5.0 percent in the third.

US Economy Expands 2.2% in Q4


Anna Fedec | anna@tradingeconomics.com
3/27/2015 12:40:22 PM