The US’ annualised GDP growth slowed to a still-healthy 3.2 per cent in the final quarter of 2013, leading to a bounce in stockmarkets.
Following the publication of the data, the S&P 500 opened 0.47 per cent higher at 1,782.57 while the Nasdaq rose 1.17 per cent to 4,098.98.
Bureau of Economic Analysis figures reveal that fourth-quarter growth was driven by personal consumption, exports and non-housing capital investment.
In the third quarter, annualised GDP rose by 4.1 per cent. The BEA attributes the deceleration in the most recent quarter to a drop in government spending, lessened private inventory purchases and a downturn in the housing market.
Capital Economics chief US economist Paul Ashworth says the growth rate was “pretty impressive” considering the three-week federal government shutdown in October.
“The broader picture is that, as the massive fiscal drag diminishes, US economic growth is accelerating,” he says.
“The most encouraging element was the pick-up in the growth rate of domestic demand.”
Consumption growth strengthened to 3.3 per cent in the fourth quarter, from 2 per cent in the previous quarter, while business investment in equipment jumped to 6.9 per cent, from 0.2 per cent.
Exports also boomed, growing 11.4 per cent from the previous quarter’s 3.9 per cent.
Ashworth believes the 9.8 per cent fall in housing investment is likely to be temporary, with a this year already sporting a noticeable resurgence.
“Similarly, the 12.6 per cent drop in federal government spending largely reflects the impact of the shutdown,” he adds.
“We expect GDP growth to slow to about 2.5 per cent in the first half of this year, but that should be enough to keep the unemployment rate on a downward trajectory and ensure that the Fed continues with the gradual taper of its asset purchases.”
The Bureau of Economic Analysis will released a revised GDP figure on 28 February.