According to the advance estimate by the Bureau of Economic Analysis, theUSeconomy again saw dynamic growth in the final quarter of 2013. Real gross domestic product increased at an annual rate of 3.2% on the previous quarter. Unlike in the third quarter, growth largely reflected a firming up of final demand. Key contributions came from personal consumption and exports. Encouragingly, equipment investment moved up a gear after only modest growth in the preceding quarters. As was to be expected, government spending exerted an appreciable drag on growth. Not least due to the partial government shutdown in the first half of October federal government spending (excluding defense) tumbled 10.3% (annualized) on the previous quarter. The normalization of output at the federal administration level should on its own have a positive impact on growth in the first quarter of this year.
Given the cold snap in parts of the country, the economy could get off to a bumpy start to the year. The manufacturing sector also appears to have been hit by the weather. However, provisional figures show purchasing manager indices in January still well above the 50-point expansion threshold, signaling ongoing solid overall growth. The further improvement in consumer confidence, coupled with a more favorable assessment of job availability, points in the same direction.