- IHS
US economic growth slowed less than expected in the fourth quarter, with somewhat strong consumer spending offsetting the attempts by businesses to lower an inventory overhang. US gross domestic product rose at a 1.4% annual rate compared with the previously reported 1% pace, according to the Commerce Department. The economic growth revision shows better consumer spending on services and reinforces the view that the domestic economy is on a stable footing and continues to grow. Consumer spending, which accounts for more than two thirds of US economic output, surged 2.4%, compared with the 2.0% rate reported last month. However, declining profits and weak business investment reflect overseas uncertainty has hit manufacturers, energy firms and financial markets. First quarter estimates are around a 1.5% rate, with the risks to growth are tilted to the downside.
Meanwhile, the PCE data came out lower than predicted, taking pressure off the Fed to resume interest rate increases. The price index for personal consumption climbed 0.1% last month. The core measure increased 1.7% over the past 12 months. In addition to that, consumer outlays edged a mere 0.1%, compared with a 0.2% expected by economists. A separate report showed the pending home sales index advanced 3.5% to 109.1 points in February, the highest since July.
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