WASHINGTON (AP) – U.S. economic growth slowed in the fourth quarter, and economists are looking for an even weaker showing in the first quarter as severe winter weather takes its toll. But the retreat is expected to be short-lived. Stronger growth is expected for the rest of the year, thanks to a recovering job market that should boost consumer spending.
The Commerce Department said Friday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 2.2 percent in the October-December period – an estimate that was unchanged from a month ago. The economy had surged at a 5 percent rate in the third quarter.
The final look at fourth quarter GDP found consumer spending was more robust than previously estimated but business restocking was weaker.
Consumer spending, which accounts for 70 percent of economic activity, grew at a 4.4 percent rate in the fourth quarter – the strongest performance in eight years and even better than the 4.2 percent estimated a month ago. Export growth was also stronger than previously estimated, but those gains were offset by slower growth in business inventories, leaving total GDP unchanged.
Economic growth for all of 2014 was also unchanged at 2.4 percent, only a tiny improvement from the 2.2 percent growth seen in 2013. For the past five years, growth has averaged a subpar 2.2 percent. Economists, however, believe strong gains in consumer spending will propel growth to a rate of at least 3 percent in 2015, which would be the best performance in a decade.