US Growth Slower Than First Thought

US Growth Slower Than First Thought

2 Mar , 2015

The US economy slowed down more than first thought at the end of 2014 according to revised official figures.

The Commerce Department initially estimated growth at 2.6% between October and December but the most recent estimate is that the world’s largest economy grew at an annual pace of 2.2% during that period.

The revised figure was due to a slower rise in business inventory investment than previously predicted.

There was also a massive slowdown from the third quarter to the fourth in 2014, during which the US economy grew at an annual pace of 5%.This slowdown was explained by a rise in imports and a downturn in government spending.

Investors initially took the revised figure in their stride, with the Dow Jones opening unchanged, but the index slipped in afternoon trading to end the day down 0.5% at 18,133.

Despite the slowdown in growth, analysts are pretty upbeat about the general state of the US economy and about the stocks.

Chris Williamson, chief economist at Markit rightly said that, "The weaker stock build-up late last year bodes well for first quarter growth."

The global fall in petrol pricing means that consumers have more cash to spend on what they want. Consumer spending is high and accounts for about 70% of economic growth in the US.

Unemployment is coming down slowly and with negative inflation, the Federal Reserve has little choice but to keep interest rates at close to zero for the time being.

Fed chair Janet Yellon said the US economy was improving, while the employment market remained delicate. In her twice yearly address to Congress, she said there was still a good degree of flexibility as to when rates could be increased. Most analysts expect a rate rise late in the summer or in the autumn.

1 day ago ... US economy slows in fourth quarter of 2014 with GDP rising by just 2.2% ... Obama talks up US recovery and urges Republicans to back higher ...