WASHINGTON — The U.S. fourth quarter real gross domestic product growth was revised to 2.2%, a tad better than analysts expected, but there were favorable underlying details and the Commerce Department said the slight lowering of growth was less than the average revision from its first to second GDP estimate.
The fact that 2014 ended with decent real growth and that most of the gain was in U.S.-based consumption argue that the economy is set up for further growth ahead.
Inventories were revised down, reflecting new data, and suggesting a need to produce more ahead. Specifically, wholesale and nondurable goods manufacturing inventories were lowered.
Net exports cut a little more than originally estimated.
Nonresidential investment was revised up, mainly in R&D and in information processing and transportation equipment. The changes reflect new company financial data and alterations from the trade reports.
Government spending was a small problem in Q4 even after up-revision. Federal spending was down 7.5% on defense cutbacks. State and local spending took up only some of the slack — it was up 2.0%, reflecting a small upward revision in S&L construction.
Real final sales are now estimated at 2.1% growth and personal consumption is still robust at 4.2% growth. These indicate a strong underlying economy. Real PCE had its best quarter since 2006 (Q4:2010 was as strong at 4.2% growth as well).
Consumption had a small downward revision, as goods were lowered and services upped. The Commerce Department said the changes reflected new energy price data and the consumer price revisions.
GDP prices were no problem at a 0.1% rise.
After the revisions, real GDP increased 2.4% in 2014 and 2.2% in 2013.
Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See
