The U.S. government cut back its estimate for fourth-quarter GDP growth after consumer spending and exports were less than originally anticipated, suggesting whatever momentum the economy had heading into 2014 is evaporating.
The Commerce Department said on Friday that gross domestic product expanded at a 2.4 percent annual rate, which is down sharply from the 3.2 percent pace reported last month and the 4.1 percent measured in the third quarter.
Economists polled by Reuters had expected growth would be cut to a 2.5 percent pace.
Consumer spending accounted for a large chunk of the government’s revision after retail sales in November and December came in weaker than assumed. Consumer spending was cut to a 2.6 percent rate, which was still the fastest pace seen since the first quarter of 2012. It had previously been reported to have grown at a 3.3 percent pace.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, contributed 1.73 percentage points to GDP growth, down from the previously reported 2.26 percentage points. In total, final domestic demand was lowered two-tenths of a percentage point to a 1.2 percent rate.
The loss of momentum appears to have spilled over into in the first quarter of 2014, with liberals blaming an unusually cold winter that supposedly weighed down retail sales, home building and him sales, hiring and industrial production. Meanwhile, administration officials are claiming there is “no time for debating the flat earth society” over global warming, which they now call climate change due to the data not stacking up.
The Federal Reserve, which has unanimously decided to begin cutting back on the amount of money it injects into the economy through monthly bond purchases, or QE 3, claims the recent slowdown is temporary.
Fed Chair Janet Yellen told lawmakers on Thursday that the cold weather was to blame for the weakening data. However, she said that it would take a “significant change” to the economy’s prospects for the Fed to suspend its plans to wind down its bond buying.
