U.S. GDP grew at an annual rate of 3.2 percent in the fourth quarter, the Commerce Department reported Thursday. The newest estimate of the nation’s economic output represents a slowdown from the third quarter’s strong growth rate of 4.1 percent but still comes in ahead of consensus estimates, which according to Bloomberg were at 3.0 percent.
Higher consumer spending and a boost in exports were two key factors driving GDP growth last quarter, the government reported. Indeed, while GDP slowed, consumer spending accelerated considerably last quarter, from 2.0 percent growth in the third quarter to 3.3 percent. This is a positive sign, considering that consumer spending is one of the key drivers of the U.S. economy. Last quarter, it accounted for more than two-thirds of GDP growth.
Meanwhile, a larger decline in federal government spending, a slowdown in business inventory investment, and slowing state and local government spending helped to decelerate GDP growth last quarter. Businesses also slowed their spending on things like factories and equipment.
Though economic growth slowed down slightly between the third and fourth quarters, the two quarters taken together are the two strongest consecutive quarters of growth in almost two years.
While the report shows some signs of strength, it is only the first estimate of GDP growth in the fourth quarter and represents incomplete data. As the government receives more information, it will revise this estimate twice more in the coming months. Those revisions can be sizable. The third quarter’s GDP growth estimate was originally 2.8 percent, then was revised up to 3.6 percent and again to 4.1 percent.