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Updated: Advance U.S. GDP Rises 2.6% In The Fourth Quarter

By Kitco News
Friday January 30, 2014 8:30 AM

Editor's Note: The article was updated to include more information from the report and comments from CIBC.

(Kitco News) - The U.S. economy ended 2014 weaker than expected, according to the Department of Commerce’s advanced fourth-quarter gross domestic product data.       

Friday, the department said that Q4 GDP rose 2.6% on a seasonally adjusted basis, down compared to the final third-quarter print of 5.0%. Economists were fairly subdued ahead of the report, as consensus forecasts were calling for growth of 3.0%.

In the report the department "emphasized" that this report is subject to further revision and the data will be updated on Feb. 27.

"The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased," the report siad.

Looking at some of the components, real personal consumption in the fourth quarter increased 4.3% in the fourth quarter, up from a 3.2% increase in the third quarter, while durable goods increased 7.4% in the last three months of the year, down compared to a 9.2% rise reported in the third quarter.

Real nonresidential fixed investments increased 1.9% in the fourth quarter, which was down sharply compared to the 8.9% rise in the fourth. Investment in nonresidential structures increased 2.6% in the fourth quarter, down from a third-quarter rise of 4.8%. Real residential fixed investments increased 4.1% in the fourth quarter, up from 3.2% reported in the third quarter.

Government spending was down in the fourth quarter as the report said that federal government consumption and gross investments dropped 7.5%, compared to a 9.9% increase reported in the third quarter.

Looking at inflation pressures, the department said that the price index for gross domestic purchases decreased 0.3% in the fourth quarter, down sharply compared to the 1.4% increase in the third quarter.

The core prices index, which exclude volatile food and energy prices, rose 0.7% between October and December, down compared to a 1.6% rise in the third quarter.

The advance data shows that the U.S. economy saw average economic growth of 2.4% in 2014. A negative 2.9% reading the first quarter dragged down the country's performance.

Avery Shenfeld, senior economist at CIBC World Markets, admitted that the GDP growth was “somewhat disappointing.”
“Remember, however, that this comes off an outsized 5% prior quarter and is still a pace that is a bit above potential,” he said.
He noted some potential for improvement in the report as it was a drop in government spending and higher imports that offset “very strong readings on consumer spending and a healthy pace in homebuilding.”

By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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