December 2013 Economic Indicators
Melanie Garza - Director of Operations
Revised GDP Exceeds Expectations
The U.S. economy grew more rapidly than originally expected in the third quarter. The Commerce Department adjusted its original estimate up nearly 1% from 2.8% to 3.6%, on the December 5, 2013 release. In the second quarter real GDP climbed a modest 2.5%. However, this is the highest gain since first quarter 2012.
Despite the increase, economists say high inventories were the driving factor for the reported growth. Private business inventory investment grew $116.5 billion, accounting for 1.68% points of the GDP growth.
Economists are predicting continued growth; however, problems in Washington may slow down the acceleration.
In removing private inventories, GDP grew a mere 1.9% reflecting a subtle gain. Private business spending continued to grow, but at a slower rate. Fixed investments grew 3.5% down from 4.7%; structures climbed 13.8% while second quarter results were 17.6% and equipment remained unchanged at 3.3%.
Real personal consumption expenditures increased 1.4%, down from 1.8% in the second quarter. Demand for durable goods continues to rise, as it jumped 7.7%, compared to 6.8% the previous quarter.
State and local government spending continues to inch up at 1.7%; the first time gain in two consecutive quarters in 4 years.
Consumer Confidence Hits Low
The index climbed to its highest level in nearly six years in May, at 76.2, and peaked in June at 82.1.
In October, Consumer Confidence plummeted to 72.2 as a result of the government financial crisis and ultimate shutdown. Lynn Franco, Director of Economic Indicators said, “All in all, with such uncertainty prevailing, this could be a challenging holiday season for retailers.”
Questions? Please contact Melanie Garza at mgarza@teamCOACT.com