March 27, 2014

4Q GDP estimate revised upward

March 28, 2014 – The Bureau of Economic Analysis increased its final estimate for fourth-quarter GDP growth from 2.4 percent to 2.6 percent because of an upward revision to consumer spending, according to a NAFCU Macro Data Flash.

NAFCU Senior Economist Curt Long analyzed numbers from the bureau and found that nonresidential investment, personal consumption and improvements in net exports all contributed toward the positive GDP growth. Real gross domestic income also grew 2.7 percent in the fourth quarter, compared to 1.8 percent in the third quarter.

"A slowdown in residential investment and a decline in government spending, partially due to the October government shutdown, were both a drag on economic growth," Long wrote. "Overall, the economy expanded at 1.9 percent in 2013. The economy is expected to improve over the next year as the labor market improves and fiscal headwinds subside."

Core PCE Inflation, excluding food and energy – which is the Federal Reserve's key inflation metric – decreased from 1.4 percent in the third quarter to 1.3 percent in the fourth quarter.

Long found that residential investment decreased in the fourth quarter by 7.9 percent, and government spending was down 5.2 percent. He expects the cold winter weather to dampen output results from the first quarter of 2014, but says GDP growth is expected to improve throughout the year due to personal consumption, investment and exports.