Comment on Bright outlook for US economy, despite slower Q4 growth

Bright outlook for US economy, despite slower Q4 growth

One-time factors, such as a 16 percent surge in federal defense spending, fueled the strongest acceleration in almost a dozen years. The centerpiece of the fourth quarter's growth was consumer spending, which expanded at a 4.2 percent rate. Consumer spending accounts for 70 percent of economic activity, and economists said the solid performance in the final three months of the year was an encouraging sign going into 2015. Friday's report revealed that they increased investment spending to expand and modernize their facilities at a solid 4.8 percent rate in the fourth quarter. While that was down from the pace over the previous six months, it was a marked improvement over the government's first estimate that business investment had only risen at a 1.9 percent pace during the three-month period. The robust upward revision eased concerns that businesses might cut back sharply on investment in the face of global economic weakness and a rising dollar, which hurts export sales. [...] one area of weakness in the government's report Friday — a slowdown in business stockpiling — may turn out to be a good thing for the future.

 

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