The estimated level of U.S. economic growth in the fourth quarter of last year was revised sharply downward by the Commerce Department on Friday.
The gross domestic product increased at an annual rate of 2.4%, down from the 3.2% rate initially thought a month ago and far below the 4.1% pace hit in the third quarter of 2013.
Much of the reason is due to consumer spending, which accounts for around two-thirds of all economic activity, being weaker that first thought, along with government spending being lower, which included the 16-day partial federal government shutdown in October.
This puts the growth rate of all of 2013 at 1.9%, while second have growth was at 3.3% pace, far better than the 1.8% annual rate in the first half of 2013. The total GDP growth rate in 2012 was 2.8%.
Sterne Agee Chief Economist Lindsey Piegza says this new report suggests uneven momentum in the economy.
“Going forward until corporate purse strings are adequately loosened, ramping up investment and employment, the economy is doomed to a stagnant growth rate unlikely to exceed the current 2% range,” she said. “Glass half full, this likely means consistent positive growth, glass half empty, this translates to a modest, below potential growth rate, far from the robust pace we would expect four plus years into the recovery.”