U.S. Q4 GDP growth revised up from 1% to 1.4%

Mar 25, 2016, 5:55 PM EDT
(Source: QuickClick Loans/flickr)
(Source: QuickClick Loans/flickr)

The U.S. Commerce Department released figures revising the country's Q4 GDP growth up from 1% to 1.4%.

Reuters reports:

U.S. economic growth slowed in the fourth quarter, but not as sharply as previously estimated, with fairly strong consumer spending offsetting the drag from efforts by businesses to reduce an inventory overhang. Gross domestic product increased at a 1.4 percent annual rate instead of the previously reported 1.0 percent pace, the Commerce Department said on Friday in its third GDP estimate. Relatively strong consumer spending underscores the economy's underlying strength and should further allay fears of a recession, which triggered a massive stock market sell-off early this year. That, together with a tightening labor market and rising inflation likely keeps the Federal Reserve on a path to gradually raise interest rates this year.

The Wall Street Journal notes:

The balance sheets of U.S. companies weakened during the quarter. Corporate profits after tax, without inventory valuation and capital consumption adjustments, fell at an 8.1% pace last quarter from the third. That was the largest quarterly decline since the first quarter of 2011. Profits fell 3.3% in third quarter from the second. On a year-over-year basis, corporate profits declined 3.6% in the fourth quarter. Still, for all of 2015, profits were up 3.3% from 2014. The unadjusted measure of corporate profits tracks most closely with what companies report in earnings statements.The after-tax adjusted profit reading, which more closely reflects profits on production during the quarter, fell 15% in the fourth quarter from a year earlier. That was the steepest year-over-year drop in a quarter since 2008, when the U.S. was mired in a recession. Adjusted figures showed the largest profit decline came in manufacturing, especially in production of petroleum and coal products. Profit data isn’t adjusted for inflation.

The New York Times writes:

G.D.P. growth was initially estimated to have risen at only a 0.7 percent rate but was later revised upward. The economy grew at a rate of 2 percent in the third quarter and expanded 2.4 percent for all of 2015. The upward revision reflected a stronger pace of consumer spending than previously estimated. Consumer spending, which accounts for more than two-thirds of economic activity, rose at a 2.4 percent pace and not the 2 percent rate reported last month. More consumption of services than previously estimated accounted for the revision. The fairly solid pace of consumer spending underscores the economy’s underlying strength and should further allay fears of a recession, which had led to a huge stock market sell-off early this year.