File photo: Shipping cranes and containers at a U.S. port representing exports and imports factored in overall gross domestic product, or GDP. (Photo: REUTERS)
U.S. gross domestic product (GDP) showed economic growth slowed in the fourth quarter to a pitiful 1% pace, but it did still beat estimates. The latest GDP number topped the previously reported 0.7% pace, according to the Commerce Department report released on Friday.
Economists polled by Reuters had expected that fourth-quarter GDP growth to be downwardly revised to a 0.4% pace. Meanwhile, the U.S. economy grew at a rate of just 2.0% in the third quarter, far below historical averages since World War II.
The Commerce Department report said businesses accumulated $81.7 billion worth of inventory, up from the $68.6 billion initially reported last month. The largest industry contributors to inventory investment were retail trade and mining, utilities and construction. With the new data, inventories sliced off only 0.14% from GDP growth instead of the previously reported 0.45%.
First-quarter GDP growth estimates are as high as a 2.5% rate, but a strong dollar, recent global and domestic slowdowns have tightened financial markets. The upward revision to fourth-quarter GDP growth was also fueled by a smaller trade deficit than initially reported. The trade deficit subtracted 0.25% point from GDP growth instead of the 0.47% point reported last month.
Business spending on equipment sliced off just 1.8% rate last quarter, compared to the initially reported 2.5%. However, there were also downward revisions to consumer spending, which accounts for more than two thirds of all U.S. economic activity. Consumer spending rose by 2.0% rather than 2.2% rate reported last month.
