January 30, 2014

GDP grows 3.2% in 4Q, 1.9% for year

Jan. 31, 2014 – NAFCU Chief Economist David Carrier said nonresidential investment, personal consumption and net exports all contributed to stronger than expected GDP growth of 3.2 percent in the fourth quarter, which followed a 4.1 percent increase in the third quarter.

Carrier analyzed data from the Bureau of Economic Analysis in a Macro Data Flash. He wrote, "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. 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."

Residential investment went down 9.8 percent while nonresidential investment increased 3.8 percent. Consumer spending went up 3.3 percent and government spending decreased 4.9 percent. Carrier also pointed out that the Federal Reserve Board's key inflation metric, core PCE inflation (personal consumption expenditures), excluding food and energy, decreased from 1.4 percent in the third quarter to 1.1 percent. Overall PCE inflation went down from 1.9 percent in the third quarter to 0.7 percent.

The NAFCU research department will analyze fourth quarter real gross domestic income and nominal corporate profit data in a future report, when the information is available.