Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

US economy grows 3.2% in Q4

US economy grows 3.2% in Q4

US GDP grew 3.2% in the fourth quarter driven by consumption, exports and state spending, official figures show.

This was down from 4.1% in the third quarter, but underlines why the Federal Reserve was sufficiently confident in the rate of economic growth to taper bond purchases by $10 billion this month.

The US Department of Commerce's Bureau of Economic Analysis said the deceleration in the fourth quarter reflected slowing inventory building and reduced federal government spending as well as lower non-residential fixed investment.

Capital Economics' chief US economist Paul Ashworth branded the figures 'pretty impressive', adding 'the broader picture is that, as the massive fiscal drag diminshes, US economic growth is accelerating.'

'The most encouraging element was the pick-up in the growth rate of domestic demand. Consumption growth accelerated to 3.3% in the fourth quarter, from 2.0% in the third. Growth in business investment in equipment picked up to 6.9%, from 0.2%,' he said.

'There were some weak elements, but they should be temporary.  Residential investment  fell by 9.8%, but the most recent resurgence in housing starts suggests that will be reversed in the first quarter. Similarly, the 12.6% drop in Federal government spending largely reflects the impact of the shutdown.'

'We expect GDP growth to slow to about 2.5% in the first half of this year, but that should be enough to keep the unemployment rate on a downward trajectory and ensure that the Fed continues with the gradual taper of its asset purchases.'

The pick-up in export growth to 11.4%, from 3.9%, was also a big positive. Net external demand added 1.3% to overall GDP growth, as imports increased by only 0.9%.

The Department will release its second Q4 GDP estimate on February 28.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Kames' Roberts: how we're positioned for rising inflation

Kames' Roberts: how we're positioned for rising inflation

Kames Capital's head of fixed income David Roberts says inflation remains robust, leading the firm to build protection into its portfolios.

Play PCMR: Brexit - get ready for double-digit sterling depreciation

PCMR: Brexit - get ready for double-digit sterling depreciation

Gina Sanchez, founder and chair at consultancy ChanticoGlobal, says a Brexit would result in a 15% depreciation of sterling

Play A-rated Devlin: why we love European tech

A-rated Devlin: why we love European tech

Citywire A-rated Vincent Devlin reveals where he sees opportunities in Scandinavia.

Your Business: Cover Star Club

Profile: Quilter Cheviot's international boss on taking the firm global

Profile: Quilter Cheviot's international boss on taking the firm global

The term ‘vertical integration’ has lost much of its descriptive value in recent months through over-use and misuse

Wealth Manager on Twitter