US GDP sees 2.2 pct increase in Q4

WASHINGTON, Feb 27 (KUNA) -- Data released by the Bureau of Economic Analysis at the US Department of Commerce on Friday showed a 2.2 percent growth in the country's Gross Domestic Product (GDP) in the fourth quarter of 2014.
In a White House statement, Jason Furman, Chairman of the Council of Economic Advisers, said, "The report reflects especially strong consumption growth, an upward revision to business fixed investment, and continued residential investment increases," and noted that "real GDP has risen 2.4 percent versus the fourth quarter of 2013." The 2.2-percent figure "was revised down 0.4 percentage point from the advance estimate released in January," Furman added, due to "lower inventory investment than had been previously estimated." "Changes in inventory investment are an especially volatile component of quarterly growth," he explained in the statement.
Real personal consumption expenditures, meanwhile, grew by 4.2 percent, "matching the fastest quarter in the recovery," Furman said.
These expenditures make up two thirds of the GDP.
"Consumption growth continues to trend upward as consumers' economic optimism remains near post-recession highs," he noted. "One reason that consumption has further scope to rise is that households spend less of their incomes servicing debts than they have in more than three decades - despite the substantial run-up in household debt that predated the financial crisis." Real private domestic final purchases (PDFP), which are made up of both consumption and fixed investment, grew by 4.3 percent in the fourth quarter, Friday's numbers showed.
"Real PDFP growth is generally a more stable and forward-looking indicator than real GDP, as it excludes volatile components like inventory investment, net exports, and government spending," Furman affirmed. "The entire fourth-quarter deceleration in real GDP can be attributed to two of these volatile categories, net exports and government spending - two categories that boosted real GDP in the third quarter." Overall, he concluded, the numbers are "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". (end) ys.hb