The Department of Commerce informed today that US GDP grew by 3.2% in the last quarter of 2013.
It added that economic activity has accelerated since December and consumer spending is pushing up growth prospects.
The positive outlook for US GDP (gross domestic product) growth led to the Federal Reserve’s easing of the bond-buying stimulus program by another $10 billion to $65 billion per month.
Ben Bernanke, the outgoing Fed Chairman had said in December if the economy continues expanding well and unemployment does not rise, the tapering will continue its downward path each month.
The majority of economists currently forecast US GDP growth of at least 3% for 2014.
US economy recovering and strengthening
In an interview with the BBC, Bill Blain, chief strategist at Mint Partners said “These figures are as expected and demonstrate that the US economy is recovering, it is strengthening. Many of the problems which were troubling the US economy such as a government slowdown are in the past, and we can think of this now as a sustained growth.” He also added “We have to ask if the consumer boom is to continue, and if it is sustainable.”
(Source: Bureau of Economic Analysis, Dept. of Commerce)
US GDP grew in large part due to consumer spending
The US Commerce Department said the GDP growth in Q4 2013 was mainly reflected by positive contributions from:
- consumer spending (PCE- personal consumption expenditures)
- exports
- non-residential fixed investment
- private inventory investment
- residential fixed investment
- state and local government spending (partly offset by negative contributions from the federal government).
Imports, which are a negative contribution to GDP calculations, increased.
(Source: Bureau of Economic Analysis, Dept. of Commerce)
A slowdown in Q4 2013 in the growth of state and local government spending, non-residential fixed investment, federal government spending, and residential fixed investment were partly offset by increases in exports and consumer spending, as well as a decline in imports.
The greatest positive impact on economic growth results were goods and services exports, which grew by 11.4% in Q4 2013, compared to 3.9% in Q3 2013. Federal government consumption and investment, however, fell by 12.6 during the last quarter compared to a 1.5% fall in the previous quarter. This is mainly due to the partial government shutdown in October, which is falls within the fourth quarter.
US GDP grew very fast in 2nd half of 2013
According to the latest GDP figures, the US economy grew at a 3.7% annual rate during second half of 2013, compared to 1.8% during the first half.
Q3 + Q4 2013 GDP growth marks the second fastest growth since 2003, when the US GDP grew at a 5.8% annualized rate.
The price index in Q4 2013 for gross domestic purchases (prices paid by US residents) rose 1.2%, compared to 1.8% in Q3 2013. The price index in Q4 2013 for gross domestic purchases (excluding food and energy) rose 1.7%, compared to 1.5% in the previous quarter.