U.S. GDP Growth Moderates in Q4 and in 2013

Real GDP growth for Q4'13 eased to 3.2% (2.7% y/y) from 4.1% during the third quarter. The gain roughly matched consensus expectations for a 3.3% rise in the Action Economics survey. For all of last year growth also moderated to 1.9%, down nearly a full percentage point from 2012

Domestic final sales rose at a slower 1.4% rate last quarter. Growth similarly eased y/y to 1.6% and for the full year to 1.5%. Growth in personal consumption expenditures improved to 3.3% last quarter (2.3% y/y). Spending on durable goods slowed to 5.9% (6.5% y/y) as motor vehicle purchases edged slightly higher in the quarter (2.5% y/y). Nondurable spending, however, jumped at a 4.4% rate (2.9% y/y) led by a surge in purchases of apparel. Growth in spending on services also improved sharply to 2.5% (1.5% y/y). Business fixed investment growth eased to a still firm 3.8% rate (2.1% y/y).

To the downside was residential investment which fell at a 9.8% rate (+6.3% y/y) with poor weather. Spending still rose a heady and steady 12.0% for all of 2013. Government spending also worked lower at a 4.9% rate (-2.3% y/y). Defense spending fell at a 14.0% rate (-6.8% y/y). Final sales to private domestic purchasers increased at a 2.9% rate (2.4% y/y), up from 2.7% in Q3.

The effects from inventory investment and foreign trade were both positive. A faster rate of inventory accumulation added 0.4 percentage points to Q4 GDP growth following the 1.7 point addition in Q3. For the full year, however, the addition to growth was a steady 0.2 percentage points. A lessened foreign trade deficit added 1.3 percentage points to Q4 growth and a steady 0.2 points for the full year. The improvement owed last quarter to an 11.4% rise (5.4% y/y) in exports versus a 1.0% gain (2.7% y/y) in imports.

Price inflation moderated in Q4. The chain-type GDP price index rose at a 1.3% rate (1.3% y/y) and 1.4% for the full year, down from 1.7% in 2012. The personal consumption price index rose at a slower 0.7% rate (0.9% y/y) but the rise in the business fixed investment index picked up slightly to 1.4% (1.3% y/y). The residential investment price index surged at an 8.3% rate (6.2% y/y), the fastest y/y growth since early 2006.

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail in the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Action Economics consensus estimates can be found in AS1REPNA.