U.S. output continued to grow during the fourth quarter - U.S. GDP growth slowed to 2.2% in Q4, unchanged from estimates
The BEA, which is a division of the U.S. Department of Commerce, attributed the increase in real GDP during the quarter to ”positive contributions from personal consumption expenditures, nonresidential fixed investment, exports, state and local government spending, and residential fixed investment.” The deceleration compared to the third quarter, the BEA said, “primarily reflected an upturn in imports, a downturn in federal government spending, a deceleration in nonresidential fixed investment, and a larger decrease in private inventory investment.”
In Friday’s release the BEA also said
that it estimates that the price index for gross domestic purchases —
which measures prices paid by U.S. residents — fell 0.1% in the fourth
quarter, a decrease consistent with the estimate provided in February.
During the third quarter of 2014, this index increased 1.4%. Personal
expenditures increased 4.4% during the quarter, up from a 3.2% increase
in the prior quarter.
“There’s little real news in today’s GDP report that wasn’t already known. Consumers spent briskly in the fourth quarter, but much of that increase was on increasingly affordable foreign goods,” Jim Baird, chief investment officer for Plante Moran Financial Advisors, wrote in a research note Friday morning. “The impact of the strengthening dollar certainly played a role. Imports surged in the closing months of 2014; American consumers opened their wallets for cheaper foreign goods. In the third quarter, net exports provided a boost to overall growth. In the final quarter, the trade deficit shaved about 1% off top line GDP.”
With the final estimate for fourth quarter GDP growth in place, full-year 2014 GDP growth comes into view, and the numbers are consistent with estimates provided earlier in the year. Real GDP increased 2.4% during 2014, up from 2.2% growth in 2013. This marks the best full-year growth since 2010.
According to the BEA, corporate profits decreased $30.4 billion during the quarter, a sharp contrast to the $64.5 billion increase during the third quarter and a drop that was driven by a strong U.S dollar that dented earnings won abroad.
The BEA’s first estimate for first quarter GDP growth will be released on April 29 at 8:30 am EDT. Analyst estimates for this release are in the 1.5% to 2.5% range, and according to Plante Moran’s Baird, have been edging lower in recent weeks. “Declining expectations have been the result of several factors,” he noted, “including higher imports supported by the strong dollar, declining capital expenditures – particularly in the energy sector, and downside surprises in the most recent releases for housing starts and durable goods spending.”
