The Commerce Department’s report on gross domestic product (GDP) has been released for the fourth quarter of 2013. The headline shows growth of 3.2%, which met the Dow Jones estimate of 3.2% and surpassed the Bloomberg estimate of 3.0%. What economic followers need to pay attention to, perhaps just as much or more than the headline report, is the price index. This came in at 1.3%.
24/7 Wall St. would caution readers that this is simply the first review of GDP for the fourth quarter. There will be at least two more revisions in the months ahead. If the numbers hold up, then total U.S. GDP growth was an anemic 1.9% in 2013, versus 2.8% in 2012.
The BEA report showed that current-dollar GDP, the value of the nation’s output of goods and services, rose by 4.6% ($189.6 billion) in the fourth quarter to a level of $17.1025 trillion. That compares to the third-quarter current-dollar GDP growth of 6.2%, or $251.9 billion.
Before worrying about the anemic growth too much, the second half of 2013 had growth of 3.7%, versus just 1.8% in the first half. That second half growth even included the time covering the government shutdown. It also accounts for the dismal durable goods report we saw this week for the month of December.
Personal consumption seems to have saved the day, and that accounts for close to two-thirds of GDP now. This figure was up 3.3% in the fourth quarter. Another boost came from the 3.8% growth seen in business spending. Residential spending was a huge drag, with a drop of 9.8%.
It is likely that the FOMC members knew what this reading was before they announced their bond-buying tapering measures yet again on Wednesday. The Federal Reserve is calling for U.S. GDP growth of 2.8% to 3.2% for all of 2014.
Stocks are still higher after the report: the S&P 500 futures were up 5.75 at 1,777 and the DJIA futures were up 46 at 15,744.