Friday, February 28, 2014

Real GDP

Friday's revisions to fourth-quarter gross domestic product highlight the swing shift in growth. Real GDP grew at a robust 4.1% annual pace in the third quarter, and a month ago, the Commerce Department said the economy grew at a strong 3.2% pace in the fourth quarter.
With more monthly data available, however, Commerce has trimmed down year-end growth to just 2.4%. That puts growth back down to the same modest rate averaged so far in this recovery. The slower growth also explains why employment gains have eased after stronger job growth earlier in 2013.
Inventories are a big reason for the fast-slow pattern. Since the recovery started in mid-2009, the inventory sector has added almost three percentage points or subtracted as much as two points to quarterly growth.