US fourth-quarter growth of 2.8pc disappoints
The US economy grew less than forecast in the final quarter of last year, according to new figures that economists say signal the first three months of this year are likely to be weaker.
The figures go some way to explaining why Federal Reserve chairman Ben Bernanke put the accent on the headwinds the recovery still faces at his press conference earlier this week.
Gross domestic product expanded at a 2.8pc annual pace in the fourth quarter, the Commerce Department said on Friday.
While stronger than the 1.8pc recorded in the third quarter, and the best showing since early 2010, it fell short of the 3pc most had expected.
Those expectations had been built around higher spending by US consumers, who still account for more than two-thirds of GDP. Although their 2pc spending pace improved upon the third quarter, it again trailed expectations of 2.4pc.
The figures go some way to explaining why Federal Reserve chairman Ben Bernanke put the accent on the headwinds the recovery still faces at his press conference earlier this week.
Mr Bernanke said that he’s not ready to declare that the economy had entered a “new, stronger phrase” despite improving data from the labour market and evidence of a resilience among consumers.
Fourth-quarter growth also received an unexpectedly large lift as companies and factories increased their stockpile of goods at much faster pace than expected. That boost – that amounted to 1.9 percentage points – is not expected to be repeated in the current quarter.
This is a “less favourable report than people will have been looking for,” said David Semmens, an economist at Standard Chartered. “This report only reinforces the 0.8pc that we look for in” the first quarter, he said.
Despite ambitions to move the US economy away from a reliance on the consumer, the recovery remains highly dependent on their spending.
And the report from the Commerce Department highlighted the pressure they still face more than three years on from the crisis.
Inflation-adjusted income fell 0.1pc for the whole of 2011 – a year that saw a sharp spike in food and petrol costs at the beginning. For the whole of 2011, the economy grew 1.7pc.
