The revised U.S. economic growth rate for the last quarter has been released today and it is not good news. According to the Department of Commerce’s Bureau of Economic Analysis, the nation’s gross domestic product growth rate was revised down to a 2.1 annual rate, the weakest quarterly growth since mid-2013.
This revised GDP rate is only half of the initial estimates for the quarter that was reported back in July when the GDP growth rate was reported as 4.2%. The slower than expected economic activity is an indication of a weak job market and a softer housing market, both of which are essential components for a strong economy.
The government shutdown in December may have had something to do with the weaker economic numbers, as it likely caused a reduction in government employees spending and consumer confidence decreased. Given the shutdown, the data from December was not available until today’s report, delayed from a planned mid-January release.
The 2.1 economic growth rate also indicates a slowed growth across all sectors of the economy. The services sector, which accounts for almost 80 percent of the US GDP, only grew at a 1.9 percent annual rate, much slower than the initial predictions of 3.2%. Nonresidential business investment couldn’t keep up with expected projections, falling to a growth rate of 0.4% vs the predicted 3.3%.
While the economic growth rate for last quarter certainly wasn’t as strong as initially predicted, there are signs that the economy is still expanding. Consumer spending has remained steady, the housing market continues to improve and the manufacturing sector continues to add jobs.
These factors should help the nation recover from the revised growth rate and hopefully reach the 4.2% growth as earlier predicted. With strong consumer spending and growth in other sectors, the nation is expected to report better growth in the future quarters.
