The Bureau of Economic Analysis (BEA) released the second estimate of real GDP growth for the fourth quarter of 2013. Real GDP growth was revised down to a 2.4% seasonally adjusted annual rate, from 3.2% in the advance estimate. The second estimate is based on more complete data than was available for the advance estimate. Real GDP grew at an annual rate of 4.1% in the third quarter.
The revisions were primarily reductions in the pace of personal consumption expenditures (PCE) and net exports (less exports, more imports), as well as a smaller contribution to growth from inventory investment. PCE grew at an annual pace of 2.6%, rather than 3.3%, exports 9.4% rather than 11.4%, imports 1.5% rather than 0.9%, and inventory investment contributed 0.14 percentage points to growth, rather than 0.42 in the advance estimate.
There’s not much to love in today’s report. A strengthening of fixed nonresidential investment is small compensation for the slowdown in PCE and the inventory investment pullback lurking in the shadows. This could set the stage for a softer first half of 2014 than we anticipated, but we still believe economic growth will strengthen as the year unfolds and continue into 2015.