After unexpectedly strong economic growth in the third quarter of 2014 (July through September), optimism about the recovery became more widespread. No one expected the figures to be quite as robust in the fourth quarter, leaving us to wonder just how much of a moderating effect we’d see.
The U.S. economy grew by a 2.6% annual pace in the fourth quarter, slowing from a 5.0% pace in the third quarter, according to a preliminary government estimate released by the Commerce Department Friday. Economists polled by MarketWatch predicted GDP would grow by a seasonally adjusted 3.2%.Consumer spending, which is a main source of economic activity, rose 4.3% following a 3.2% rise in the third quarter. This is the biggest gain since the first quarter of 2006. But growth slowed because of slower business and government spending and higher imports.
When expecting GDP growth above 3%, it’s obviously disappointing to see a quarterly tally at 2.6%. Under normal circumstances, 2.6% is relatively “meh,” but it stings a little more, not just because of higher expectations, but also because of the quarter that preceded it.
That said, it’s worth emphasizing that this is a preliminary tally, which will be revised twice over the next two months. Indeed, let’s not forget that the preliminary assessment for the third quarter was 3.9% before it was ultimately revised up to 5%.
In other words, today’s report is a little disappointing, but it’s not the final word on the subject.
As for the image above, the chart shows GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.