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- Fourth-quarter US gross domestic product was revised lower, to 2.5% from 2.6%, in the Commerce Department’s second estimate released Wednesday.
- The downward revision was caused mainly by inventories removing more from growth than was previously reported.
- Consumer spending, the biggest contributor to growth, was left unrevised at a 3.8% growth rate, an improvement from the prior quarter.
- More broadly, the economy is still going strong nearly a decade after the most recent recession.
The US economy in the fourth quarter grew slightly slower than initially reported, according to the Commerce Department’s second estimate of gross domestic product.
The value of all goods and services produced in the US rose at an annualized rate of 2.5%, down from the prior estimate of 2.6%, a report showed Wednesday. This was in line with the forecast of economists polled by Bloomberg.
The downward revision was caused mainly by business inventories subtracting more from growth than was previously reported. Consumer spending, the biggest contributor to the economy, was unrevised at a 3.8% growth rate.
The economy is still going strong nearly a decade after the most recent recession. With tax cuts now enacted, it will be important to watch for whether companies and consumers put that extra cash to work in the US.
The pace of growth would also justify higher interest rates from the Federal Reserve this year. Core personal consumption expenditures, the Fed’s preferred way of gauging inflation that strips out spending on food and energy, was unrevised at 1.9% – just below its 2% target.
“My personal outlook for the economy has strengthened since December,” Jerome Powell, the Fed chairman, said Tuesday during his first testimony before the House Financial Services Committee.
His other comments all but confirmed the Fed would raise rates again at its meeting next month and could consider four instead of the expected three increases this year if the economy were to continue strengthening.
The Commerce Department will release another GDP print for the final quarter of 2017 next month when it has more complete data.