fourth-quarter GDP growth may be revised higher: economists
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[March 13, 2014]
WASHINGTON (Reuters) — U.S.
fourth-quarter growth is likely to be revised higher after services
industry data on Wednesday suggested a much stronger pace of
consumer spending than the government had previously assumed,
according to economists.
The government last month slashed its gross domestic product
estimate for the October-December quarter to a 2.4 percent annual
pace from a previously reported 3.2 percent rate.
JPMorgan and forecasting firm Macroeconomic Advisers said the
quarterly services survey, from which the government's estimates for
services consumption is derived, showed a much more robust pace of
consumer spending in the fourth quarter than the government's
estimated 2.6 percent rate.
"We now believe real consumption increased 3.4 percent," said Silver
in a research note. "We are raising our tracking estimate of fourth
quarter real GDP growth to 3.0 percent."
Macroeconomic Advisers raised its tracking estimate of
fourth-quarter GDP growth by five-tenths of a percentage point to
"Key components of the quarterly services survey were above the
government's assumption, with the largest positive surprise at
non-profit hospitals," said Ben Herzon, a senior economist at
Macroeconomic Advisers in St. Louis.
The economy grew at a 4.1 percent rate in the third quarter.
It is not unusual for the government to make big revisions to GDP
numbers as it does not have complete data when it makes its first
and second estimates. The quarterly services survey has caused
revisions to GDP growth over the last several years.
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Should the government raise fourth-quarter growth, that would
suggest underlying strength in the economy at the end of 2013 and
bolster the argument that a slowdown in growth at the start of this
year was weather-driven and would be temporary.
"Improved momentum from an upward revision to fourth-quarter
services consumption suggests faster growth of services consumption
in the first quarter," said Herzon. "As a result, we raised our
tracking forecast of first-quarter GDP growth by two-tenths to 1.6
The government will publish its third GDP growth estimate for the
fourth quarter on March 27.
(Reporting by Lucia Mutikani; editing by
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