Gross domestic product increased at a 1.4 percent annual rate instead of the previously reported 1.0 percent pace. Profits from the rest of the world fell $6.5 billion after decreasing $23.1 billion in the third quarter. In contrast, spending on durable and nondurable goods eased from growth rates seen in the third quarter, suggesting that consumers were holding back in the fourth quarter from making larger purchases.
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The strong dollar’s hit on exports and slow growth elsewhere were also not as strong as thought, and homebuying was better as well.
A more than 60 percent plunge in crude oil prices from highs above $100 a barrel in June 2014 has also weighed on the profits of oilfield service firms like Schlumberger (SLB.N) and Halliburton (HAL.N). That was better than the 1 percent growth rate estimated a month ago but still below the 2 percent annual growth for the July-September quarter.
Economists had been expecting an upward revision to the fourth-quarter GDP stat. However, Friday’s result was stronger than was generally predicted. BEA noted that the decline could be attributed to the drop in profits in the petroleum and coal industries. GDP increased 2.4% in 2015 from 2014, roughly in line with the gains recorded since the economy emerged from recession in mid-2009.
For the full year, consumer spending grew 3.1%, the fastest pace since 2005. Falling imports, a smaller drop in private inventory investment and higher federal spending partially offset the declines.
A slowdown in stockpiling by businesses reduced growth by 0.22 percentage point, slightly more than the 0.14 percentage point drag previously estimated. Nonresidential fixed investment fell at 2.1% pace, worse than the prior reading of down 1.9%. The Commerce Department’s broad measure of consumer spending showed a healthy gain in January, but retail sales were lackluster for the first two months of the year.
Data showed that American consumers spent more in the period than originally estimated, with spending up 2.4 percent from the previous quarter, compared with the earlier 2.0 percent estimate.
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Profits after tax with inventory valuation and capital consumption adjustments declined at an annual rate of 8.4 per cent, the biggest drop since the first quarter of 2014, after dropping at a 1.7 per cent pace in the third quarter.
