March 1, 2013 – NAFCU Chief Economist David Carrier said Thursday that housing and consumer spending kept the economy in positive territory in the fourth quarter, and that favorable conditions in the housing sector should continue to help support economic growth this year.
The government’s second estimate of fourth-quarter GDP, released yesterday, showed a 0.1 percent gain, a reversal of the previous estimate showing a 0.1 percent decline.
Though the revision shows positive growth in the fourth quarter, Carrier noted that “overall growth is still stagnant due to decreases in defense spending and weaker inventory accumulation.” He also pointed to continuing uncertainty about the direction and impact of federal budget negotiations.
Businesses are also reluctant to hire, Carrier said, and consumers are reluctant to spend without significant improvement in the labor market. “On the positive side, the greater-than-expected rebound in the housing market should continue to boost economic growth throughout 2013,” he noted.
The latest fourth-quarter GDP estimate also showed that:
- consumer spending increased 2.1 percent;
- government spending decreased 6.9 percent; and
- growth in inventories shrank from $60.3 billion to $12 billion.
Contributions to fourth-quarter GDP growth were led by gains in personal consumption expenditures (1.5 percent), followed by nonresidential investment (1 percent), residential investment (0.4 percent) and net exports (0.3 percent). Drags on GDP included government spending and investment (-1.4 percent) and declining inventory accumulation (-1.6 percent).