Last summer, the U.S. economy seemed like it was just starting to hum along. The government reported growth of 4.1 percent in the third quarter, the fastest it had been since 2011. Then, the fourth quarter came along, bringing with it a government shutdown and the start of snow, and the economy’s growth slowed by nearly 2 percentage points — dropping to 2.4 percent, according to the latest estimate from the Bureau of Economic Analysis.
Time to worry? Not yet. BEA’s lower growth estimate came as no surprise to economists. When you consider what the economy went through in the final three months of the year, some economists argue its performance wasn’t so shabby.
“While 2.4% is fairly sluggish, it was despite more adverse than usual weather at the end of the quarter and the government shutdown at the start,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients after the report’s release.
BEA’s revision reflects cuts in consumer spending, lower inventory investment, fewer exports, and less state and local government spending than initially thought.
The 16-day partial government shutdown is still believed to have subtracted 0.3 percentage points from growth, a spokeswoman for the Bureau of Economic Analysis confirmed Friday. The bureau doesn’t specifically break out weather effects on the economy unless there are catastrophic events, she said, but economists widely see the tough winter weather in December, January, and February as having contributed to the spate of soft data that have been released recently.
“Part of [the recent] softness may reflect adverse weather conditions, but at this point it’s difficult to discern exactly how much,” Federal Reserve Chair Janet Yellen told members of the Senate Banking Committee on Thursday. “In the weeks and months ahead, my colleagues and I will be attendant to signals to indicate whether the recovery is progressing in line with our earlier expectations.”
Add back the 0.3 percentage points from the government shutdown and a little bit more from the weather’s drag, and the recovery seems to be progressing as expected, said Robert Dye, chief economist of Comerica Bank. “This is not a 4 or 5 percent [growth] economy, it’s a maybe something in the order of 2.5 to 3 percent economy, so that’s not a bad number,” Dye said of Friday’s revision.
Economists don’t expect much of a pickup in the first quarter, thanks to that bad weather and those weak data readings, but many remain hopeful that growth in 2014 is likely to beat out the 1.9 percent growth of last year.
The Bureau of Economic Analysis will release an additional update on fourth-quarter growth on March 27.
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With three days until the first debate, the polls are coming fast and furious. The latest round:
- An Associated Press/Gfk poll of registered voters found very few voters committed, with Clinton leading Trump, 37% to 29%, and Gary Johnson at 7%.
- A McClatchy-Marist poll gave Clinton a six-point edge, 45% to 39%, in a four-way ballot test. Johnson pulls 10% support, with Jill Stein at 4%.
- Rasmussen, which has drawn criticism for continually showing Donald Trump doing much better than he does in other polls, is at it again. A new survey gives Trump a five-point lead, 44%-39%.
In contrast to Hillary Clinton's meticulous debate practice sessions, Donald Trump "is largely shunning traditional debate preparations, but has been watching video of…Clinton’s best and worst debate moments, looking for her vulnerabilities.” Trump “has paid only cursory attention to briefing materials. He has refused to use lecterns in mock debate sessions despite the urging of his advisers. He prefers spitballing ideas with his team rather than honing them into crisp, two-minute answers.”
Donald Trump "is on the precipice of becoming the only major-party presidential candidate this century not to reach out to millions of American voters whose dominant, first or just preferred language is Spanish. Trump has not only failed to buy any Spanish-language television or radio ads, he so far has avoided even offering a translation of his website into Spanish, breaking with two decades of bipartisan tradition."
Bill and Hillary Clinton have purchased the home next door to their primary residence in tony Chappaqua, New York, for $1.16 million. "By purchasing the new home, the Clinton's now own the entire cul-de-sac at the end of the road in the leafy New York suburb. The purchase makes it easier for the United States Secret Service to protect the former president and possible future commander in chief."