The Bureau of Economic Analysis (BEA) said that real GDP growth in the fourth quarter of 2013 was an annualized 2.6 percent. This was lower than the original estimate of 3.2 percent, but higher than the first revision of 2.4 percent. Real GDP increased 1.9 percent in 2013 as a whole.
Service sector consumer spending was higher in this revision, adding 1.57 percentage points to real GDP instead of 1.00 percent in the last estimate. Americans spent 3.5 percent more on service sector purchases in the fourth quarter, its fastest pace since the second quarter of 2005. It was also a rebound from the more paltry 0.7 percent rate in the third quarter of 2013. Overall consumer spending rose 3.3 percent, with a 2.9 percent increase in goods purchases.
On the other hand, fixed investments added less to real GDP than previously thought, contributing 0.43 percentage points to growth instead of 0.58 percent. In the fourth quarter, spending on both residential and nonresidential structures were lower, subtracting 0.31 percentage points from real GDP combined. Equipment purchases by businesses added 0.58 percentage points, with spending on computers, transportation and other equipment, and intellectual property products being a positive.
Otherwise, the trends in this release were similar to the past releases. Consumer spending, business investment, and net exports were bright spots, but government spending served on a drag to growth, subtracting 0.99 percentage points from real GDP.
This will not be our last look at the fourth quarter. On April 25, BEA will begin releasing quarterly real GDP data industry. Prior to this, such information was only available annually. As such, it will allow us to be able to more accurately discuss how the manufacturing activity affects changes in quarterly output relative to other sectors.
Meanwhile, the first estimates of first quarter 2014 real GDP data will be released on April 30. I am currently estimating real GDP growth of 2.1 percent for the current quarter.
Chad Moutray is the chief economist, National Association of Manufacturers.
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