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Slower US GDP growth

February 27, 2015

The US economy has not expanded as fast as previously believed, new data from the Commerce Department have shown. But analysts agreed the slowdown would only be of a temporary nature as the year progressed.

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US workers at a copper mine AL.COM /Landov
Image: picture alliance/landov

US gross domestic product (GDP) grew at a rate of 2.2 percent in the final quarter of last year, revised down from a previously expected expansion of 2.6 percent for the October-December period, the Commerce Department announced Friday.

The figure marked a sharp slowdown from 5-percent growth of GDP in the previous quarter, which had been the strongest expansion in 11 years.

Economists said the slowdown came on the back of weaker business stockpiling and a larger trade deficit.

No big worry

But analysts put a positive spin on the news, saying that less-than-expected fourth-quarter growth was by no means indicative of a longer trend.

On the contrary, the slowdown would be of a temporary nature, they argued, citing strong consumer spending and gains in other measures of domestic demand.

Detroit - City at the Crossroads

A robust labor market and lower gasoline prices are likely to lend even more momentum to private consumption and help the US navigate an otherwise turbulent global economy.

With many economic indicators pointing upwards, the US central bank is considering raising its benchmark interest rate to 0.25 percentage points in the course of year, with the change widely expected to come no sooner than mid-2015.

hg/cjc (AFP, AP, Reuters)