- Chris Williamson Markit chief economist
Not only bad weather but also overseas volatility and restrained consumers and companies demand are diminishing hopes for an early-2014 breakout in economic growth. According to a report from the Bureau of Economic Analysis, the world's largest economy slowed to a seasonally adjusted rate of 2.4% in the final quarter, with a growth being revised down from 3.2%. The data also surprised markets to the downside, as economists excepted a deceleration to 2.6%. The main downside pressure came from weaker-than-expected consumer spending that accounts for the majority of overall economic activity. The fact American households spent around $68 billion or 2.6% more over the observed period, adding 1.73% to GDP. While the second estimate cut off some 53 basis points from growth, still it is the largest contribution since Q1 2012. What is more important is that bad weather conditions are likely to slow growth further in the Q1, with analysts expecting a 2% expansion. Unless private and business demand improves significantly, further inventory adjustments could mean even weaker performance. Even despite the questions hanging over the U.S. economy, the Fed is projected to continue tapering its stimulus programme as long as the labour market shows signs of life.
A separate report from University of Michigan showed consumer confidence index advanced to 81.6 in February, from 81.2 a month earlier, beating markets' forecasts for 81.4.
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