U.S. Economic Growth Clocks In At Just 2.2% In 4Q, Profits Take Biggest Hit Since 2008

U.S. economic growth cooled in the fourth quarter, down from the initial estimates but on par with revisions, according to the Commerce Department. Business pulled back on inventory and equipment investment, leaving only consumer spending as the counterweight to across-the-board disappointment.

Gross domestic product (GDP) expanded at a 2.2 percent annual rate, which is unrevised from last month’s (the second) forecast, the Commerce Department said on Friday in its third estimate. The report also found that after-tax corporate profits fell at a 1.6 percent rate in the fourth quarter, though after-tax profits increased at a 4.7 percent rate in the July-September period.

However, throughout 2014, profits decreased by 8.3 percent, which is the largest annual drop since 2008.

Business investment on equipment was revised to show an increase of 0.6 percent rather than the previously estimated 0.9 percent. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 4.4 percent rate in the fourth quarter instead of the 4.2 percent pace reported last month. It was the fastest rate since the first quarter of 2006, likely due to latent effects of lower fas prices. However, crude is on the rise, leaving the gauge uncertain at best.

Trade sliced off 1.03 percentage points instead of the 1.15 points reported last month, while residential construction spending in the fourth quarter was revised up and government spending was a touch weaker than previously reported.