U.S. Fourth-Quarter Growth Revised Upward to 2.1% on Consumption

U.S. Economy Grew at 2.1% Pace in Fourth-Quarter

The U.S. economy grew in the fourth quarter at a faster pace than previously reported on higher consumer spending, Commerce Department data showed Thursday in Washington.

Key Points

  • Gross domestic product rose at a 2.1 annualized pace (forecast was for 2 percent), revised from 1.9 percent
  • Consumer spending, the biggest part of the economy, rose at a 3.5 percent rate, revised from 3 percent; added 2.4 percentage points to growth, revised from 2.05 points
  • Corporate profits in the U.S. jumped 9.3 percent from a year earlier, the most since 2012, and rose 0.5 percent from the previous three months, in the first estimate for the fourth quarter
  • Trade subtracted 1.82 percentage points from growth, the most since 2004, compared with the prior estimate of a 1.7-point drag, on weaker exports and higher imports

Big Picture

The data reinforce the underlying story of the U.S. economy: the seven-year expansion continues to be led by consumers, who are cushioned by a firm labor market and rising confidence. At the same time, rising corporate profits could provide continued momentum for hiring and support further capital investment. Analysts expect first-quarter growth of about 1.9 percent, while the Trump administration has said its policies will eventually result in a 3 percent pace or greater.

Other Details

  • Upward revision to consumption reflects spending on net foreign travel and recreation services, as well as gasoline and other energy goods
  • Nonresidential fixed investment revised lower on intellectual-property products, reflecting Census data and company financial reports
  • Data represent the last of three GDP estimates for the quarter before annual revisions in July
  • Pre-tax corporate profits were down 0.1 percent for all of 2016, after a 3 percent drop in 2015
  • Inventories added 1.01 percentage point to growth, revised from 0.94 point
  • Stripping out inventories and trade, so-called final sales to domestic purchasers increased at a 2.8 percent rate, revised from a 2.6 percent pace

— With assistance by Chris Middleton

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