Now you see it, now you don’t: The government on Friday chopped its estimate of US growth in the waning months of 2013, mainly because consumers did not spend quite as much as originally reported.
The total value of all goods and services produced by the economy, known as gross domestic product, was lowered to a 2.4 percent growth rate in the fourth quarter. Initially the Commerce Department had reported the figure grew at 3.2 percent. GDP is revised twice after its initial release.
The revised GDP matched the forecast of economists surveyed by MarketWatch. In pre-market trades on Friday, stock futures remained in the red.
The reduced growth estimate for the fourth quarter suggests the US did not enter the new year with as much momentum as previously believed.
Still, the report contained pockets of strength such as a steady increase in consumer spending, higher business investment in equipment and a surge in American exports. If those trends persist, growth is likely to pick up in the months ahead, especially once the weather warms up after an unusually harsh winter, most economists believe.
The lower growth figure stems from downward revisions in consumer spending, exports, inventory investment and government outlays.
The increase in consumer spending was trimmed to 2.6 percent from 3.3 percent, mostly because Americans spent less than initially calculated on big-ticket items such as autos, appliances and electronics. That’s still the fastest increase in seven quarters, however.
Exports, meanwhile, rose 9.4 percent instead of 11.4 percent. And the increase in imports was revised up to 1.5 percent from 0.9 percent.
Inventories, for their part, still soared, but not quite as high. They rose $117.4 billion, not $127.2 billion as previously reported.
Excluding inventories, final sales of American-made goods and services was trimmed to 2.3 percent from 2.8 percent.
Government spending fell a stiffer 5.6 percent instead of 4.9 percent because states and local governments actually cut outlays instead of increasing them.
Yet company spending on equipment — a key signal of improved business conditions — was revised up to show a 10.6 percent gain instead of 6.9 percent.
Inflation as measured by the PCE index was little changed, rising at a 1 percent annual pace, or by 1.3 percent excluding food and energy.
This article originally appeared on Marketwatch.com