US fourth-quarter GDP growth was revised lower to an annualized 0.5%, according to the Bureau of Economic Analysis (BEA) of the Commerce Department. The latest estimate showed the economy slowed more than previously reported in the final quarter of the year.
Earlier estimates had placed fourth-quarter growth at 0.7% and, before that, 1.4%. Economists polled by Reuters had expected no revision from the earlier 0.7% reading.
The downgrade reflected weaker business investment, including lower spending on intellectual products and reduced inventory accumulation. Consumer spending, which accounts for more than two-thirds of the US economy, was also revised slightly lower to a 1.9% pace from 2.0%.
These changes helped explain why the final reading came in below expectations. Last year’s government shutdown was a key factor behind the slowdown from the 4.4% growth pace in the third quarter.
While headline GDP was revised lower, some underlying figures painted a more mixed picture. Final sales to private domestic purchasers, a closely watched measure of domestic demand, rose at a 1.8% pace in the fourth quarter, slightly below the previous estimate of 1.9%.
At the same time, profits from current production increased by $246.9 billion, up sharply from $175.6 billion in the third quarter. That suggests businesses saw stronger profit growth even as overall output slowed.
The report also showed that, measured from the income side, the economy grew at a 2.6% rate in the fourth quarter. Gross domestic product had expanded at a 3.5% pace in the previous quarter. Meanwhile, the average of GDP and GDI, known as gross domestic product, rose at a 1.5% rate. Neither the third- nor fourth-quarter GDP readings fully reflected the economy’s health, even as first-quarter growth was likely to improve.
