- Sam Bullard, a senior economist at Wells Fargo Securities LLC
The world's largest economy has once again showed its high level of dependence on the household spending, as fourth quarter's final GDP figures were revised up mostly due to the fact consumer spending soared the most in three years. It means the expansion had momentum heading into this year's extreme weather, and bolstering the case the central bank can start raising rates next year. On Thursday the Commerce Department said the nation's GDP expanded 2.6% in the three months through December, more than the 2.4% reported earlier, however, weaker than the 2.7% growth predicted by analysts. A report also unveiled that Americans were still willing to spend on services, especially health care, boosting the growth further, another sign that earlier slowdown was mostly provoked by a heavy snowfall and low temperatures. Several big retailers, however, already pointed that the weather conditions should improve in order to get a clearer picture of what is going on with the economy. The only worrying sign is a tepid 2.5% growth in investments over the observed period, that marks the smallest gain in 2013 and following a 17.2% advance in the third quarter. It means that the government has overestimated the contribution from non-residential and inventory investments, as companies contributed only 41 basis points towards the fourth quarter's growth. The momentum is still expected to be gained, as effects from spending cuts, austerity measures and decreased military overseas operations, are likely to abate in the coming months.
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