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Economy in U.S. Grew at Revised 0.4% Pace in Fourth Quarter

*from www.bloomberg.com, Mar. 28, 2013 (To view original article click here.)

Take Away #1: The U.S. economy grew at a faster pace than previously estimated in the fourth quarter, reflecting a bigger gain in business spending and a smaller trade gap.

Key Facts and Figures:

  • GDP rose at a 0.4% annual rate, up from a 0.1% prior estimate.
  • This follows a 3.1% pace in the third quarter.
  • The fourth-quarter slowdown was due to the biggest slump in military spending since 1972 and a reduction in the rate of inventory building.

Take Away #2: The U.S. economy is projected to accelerate in the first quarter as companies invest in new equipment and rebuild depleted stockpiles, while consumers keep spending in the face of higher taxes.

Key Facts and Figures:

  • The pace of growth and efforts to drive down joblessness help explain why Federal Reserve policy makers are sticking to asset-purchase plans.
  • The median projection in a Bloomberg survey for the Commerce Department’s third estimate of fourth-quarter GDP called for a 0.5% increase.
  • Forecasts from the 79 economists surveyed ranged from 0.1% to 0.8%.

Take Away #3: More Americans than forecast filed applications for unemployment benefits last week, brining a halt to the recent progress in the labor market.

Key Facts and Figures:

  • First-time jobless claims rose by 16,000 to 357,000 in the week ended March 23, the highest level in more than a month.
  • Economists surveyed by Bloomberg projected 340,000.

Take Away #4: Stock-index futures held gains after the figures.

Key Facts and Figures:

  • The contract on the S&P 500 Index expiring in June rose 0.1% to 1,557.9 at 8:35 a.m. in New York.
  • For all of 2012, the economy expanded 2.2% after a 1.8% gain the prior year.
  • A look at corporate profits showed earnings increased 2.3% in the fourth quarter after rising 2.4% in the prior period.
  • They climbed 3.1% from the same time in 2011.

Take Away #5: A bigger increase in the rate of business investment in structures and a smaller trade gap accounted for the upward revisions to fourth-quarter growth.

Key Facts and Figures:

  • Corporate spending on buildings increased at a revised 16.7% annual rate in the fourth quarter, the most in more than a year, after a previously reported 5.8% pace.
  • A revision to the trade gap showed a smaller difference between exports and imports.
  • The deficit shrank to $387.7 billion from $395.2 billion in the previous three months.
  • The narrowing contributed 0.33 percentage points to growth, compared with a previous estimate of 0.24 points.

Take Away #6: The Federal Reserve last week repeated that it would hold its benchmark interest rate near zero as long as joblessness stayed above 6.5% and the outlook for inflation was below 2.5%.

Key Facts and Figures:

  • The Fed said it would keep up its bond buying at a pace of $85 billion a month to bolster the expansion.
  • Consumer spending, about 70% of the economy, climbed at a 1.8% rate last quarter, revised from a previously estimated 2.1%.
  • Business spending on equipment and software climbed at an 11.8% pace after dropping at a 2.6% rate in the previous quarter.
  • It added 0.82 percentage points to growth.
  • Residential investment rose at a revised 17.6 % pace from October through December following a 13.5% rate in the third quarter.
  • Inventories subtracted 1.52 percentage points from the fourth-quarter growth compared with a previously reported 1.55 percentage points.
  • Stockpiles were rebuilt at a $13.3 billion annual pace after a $60.3 billion rate in the third quarter.

Take Away #7: Leaner inventories may make way for a first-quarter pickup in production as consumer spending holds up amid higher payroll taxes.

Key Facts and Figures:

  • Congress allowed the payroll tax to return to its 2010 level of 6.2% from 4.2% at the start of the year.
  • Lawmakers didn’t work out a plan to reduce the federal budget deficit, meaning automatic spending cuts began taking place on March 1.
  • Government spending subtracted 1.4 percentage points from growth in the fourth quarter.
  • Military outlays declined at 22.1% annual pace, the biggest decrease since the third quarter 1972.

Take Away #8: Economic activity is expected to accelerate but current indicators point to uncertainty.

Key Facts and Figures:

  • Europe continues to struggle, China growth is moderating, and the U.S. continues to deal with political stalemate.
  • The economy will expand at a 2% rate in the first quarter, according to the median estimate of 73 economists surveyed by Bloomberg.
  • Real gross domestic income for the fourth quarter rose at a 2.6% annual rate from October through December after a 1.6% increase in the third quarter.
  • Over the last four quarters, real GDP rose 1.7% compared with a 1.8% gain in gross domestic income.

*To view original article from www.bloomberg.com click here.

Filed in: Economy, Latest

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