The Commerce Department reported that real U.S. economic growth during the fourth quarter was revised higher, from a seasonally adjusted annual rate of -0.1 percent to +0.1 percent, in the second of three estimates for the period. The final reading will be released in late-March.
The upward revision was due to higher than expected exports and fewer imports, however, today’s result fell well short of the consensus estimate of a 0.5 percent growth rate.
Since the fourth quarter weakness was due in large part to falling inventories (as manufacturers stayed lean ahead of the approaching “fiscal cliff” at year-end), many analysts think a big rebound in this area will bolster economic growth in the first quarter.
But, this comes at a time when payroll tax hikes and sequester spending cuts will be pressuring consumer spending and government spending, respectively, so, it should be interesting to see how first quarter forecasts are affected in the weeks ahead as Washington tightens its belt just a little bit and retailers such as Wal-mart continue to struggle with lower consumer spending.
Source: Iacono Research
