Today’s estimate of fourth-quarter economic growth affirms the strong underlying trend of the largest and most persistent components of output, while reflecting downward revisions to more volatile sectors. The combination of personal consumption and business fixed investment—known as private domestic final purchases—grew at a somewhat faster pace than in the third quarter, indicating the same positive trend. Meanwhile, the more volatile and transitory factors that boosted growth in the third quarter subtracted from it in the fourth. Overall, today’s report is consistent with a wide range of indicators showing further labor market strengthening, increasing domestic energy security, continued low health cost growth, and resiliency in the face of slower growth in the global economy. The President’s approach to middle-class economics would build on this growth while helping to ensure that our recovery is widely shared with all American families.
FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS
1. Real gross domestic product (GDP) grew 2.2 percent at an annual rate in the fourth quarter of 2014, according to the second estimate from the Bureau of Economic Analysis. The report reflects especially strong consumption growth, an upward revision to business fixed investment, and continued residential investment increases. At the same time, the large third-quarter increase in Federal defense spending reversed, and inventory investment was revised down (see point 2). Overall, real GDP has risen 2.4 percent versus the fourth quarter of 2013.