The U.S. economy grew more rapidly in the fourth quarter than previously estimated, as consumer spending climbed by the most in three years, showing the expansion had momentum heading into this year’s harsh winter.
Gross domestic product grew at a 2.6% annualized rate from October through December, more than the 2.4% gain reported last month, figures from the Commerce Department showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a 2.7% increase.
Robust consumer spending on services, particularly health care, helped accelerate the expansion, a sign that this year’s slowdown is partly due to heavy snowfall and freezing temperatures.
“The underlying strength in the economy is reasonably good and was accelerating before we had the bad weather,” David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, said before the Commerce Department report was released. “Once we get past the first quarter and we get a real GDP reading, in the second quarter we should see a rebound.”
For all of 2013, the economy expanded 1.9% after a 2.8% increase in the prior year.
Consumer purchases, which account for almost 70% of the economy, advanced at a 3.3% in the fourth quarter, the most since the last three months of 2010 and surpassing the 2.6% gain previously reported, according to the Commerce Department report. It added 2.2 percentage points to growth from October through December and followed a 2% advance in the prior three-month period.
Abnormally cold weather probably slowed fourth-quarter growth by 0.4 points and is expected to shave a full percentage point from first-quarter GDP, according to an analysis from Macroeconomic Advisers in St. Louis.
The world’s largest economy will grow at a 1.8% pace in the first quarter, according to the median forecast of economists surveyed by Bloomberg.