US Fourth-Quarter GDP Growth Revised Lower To A 0.5% Rate

  • U.S. economic growth slowed more than previously estimated in the fourth quarter amid downgrades to business investment, including inventory accumulation, but corporate profits increased ​sharply, government data showed.
  • Gross domestic product (GDP) increased at a downwardly ‌revised 0.5% annualised rate, the Commerce Department's Bureau of Economic Analysis said in its third GDP estimate. The economy was previously reported to have grown at a 0.7% pace in the fourth quarter. The advance estimate had put GDP growth at 1.4%.
  • Revisions to the fourth quarter's growth pace reflected downgrades to business spending ​on intellectual products as well as inventories. Growth in consumer spending, which accounts for more ​than two-thirds of the economy, was revised down to a 1.9% pace from the previously reported 2.0% rate.
  • Last year's shutdown of the government was the key driver of the slowdown from the ​third quarter's 4.4% growth pace. Neither the third- nor fourth-quarter GDP readings is a true reflection of the economy's health. Final sales to private domestic purchasers, which exclude government, trade and inventories, grew ‌at ⁠a 1.8% pace in the fourth quarter. This measure of domestic demand, closely watched by policymakers, was previously estimated to have increased at a 1.9% rate. Domestic demand grew at a 2.9% pace in the July-September quarter.
  • Profits from current production increased at ​a rate of $246.9 ​billion in the ⁠fourth quarter, surging from a $175.6 billion growth pace in the third quarter. When measured from the income side, the economy grew at ​a 2.6% rate in the fourth quarter. Gross domestic income (GDI) increased ​at a ⁠3.5% pace in the July-September quarter.
  • The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, grew at ⁠a 1.5% ​rate. Gross domestic output grew at a 4.0% ​rate in the third quarter. Though growth likely picked up in the first quarter, the U.S.-Israeli war on Iran ​is casting a cloud over the economy.

(Source: Reuters)