WASHINGTON: The US economy’s slowdown in the last quarter of 2015 wasn’t quite as bad as thought.
The gross domestic product, the broadest measure of economic health, grew at an annual rate of 1 percent in the fourth quarter, the Commerce Department said yesterday. That’s an improvement from the first estimate of 0.7 percent, though just half the 2 percent growth posted in the third quarter.
The revision was made because the downturn in business stockpiling was less severe than the government’s first estimate. That helped offset slightly weaker consumer spending.
Despite global weakness and financial market turbulence, economists still believe the economy is poised to accelerate this quarter. Steady job gains and faster wage growth are boosting consumer spending, which accounts for more than two-thirds of the economy.
The fourth-quarter figure marks the slowest growth in six months, since the economy skidded to a weak 0.6 percent showing in the first quarter of last year. That was followed by a solid rebound to 3.9 percent in the second quarter and then the 2 percent gain in the summer.
Yesterday’s upward revision stems from a tweak in the government’s data for business stockpiles. That translated into a 0.1-percentage-point drag on growth, rather than a 0.5-percentage-point drag initially reported.
The trade deficit subtracted 0.3 percentage points from growth, rather than the 0.5-percentage-point drag in the first report. Exports still suffered, reflecting the struggle US producers are having from a stronger dollar. But the US imported less than first thought.
Consumer spending grew at a 2 percent rate in the fourth quarter, down from an initial estimate of 2.2 percent. Spending had surged at a 3 percent rate in the third quarter, and economists are counting on a rebound in the current quarter.
All the changes in the fourth quarter left GDP growth for the year unchanged at 2.4 percent, the same as 2014.
While some economists have boosted the odds of a recession on the declines in stock prices this year, Gus Faucher, senior economist at PNC Financial Corp, said he believes GDP will grow 2.3 percent this year, flat from the past two years.
“The decline in stock prices is something to watch out for, but consumer spending is being helped by rising home prices that are boosting household wealth, continued solid job growth and increased wage growth,” Faucher said.
