Fourth-quarter economic growth was revised down sharply Friday to 2.4 percent as new data show that consumers opened their wallets less in the face of severe weather and that businesses sold fewer goods abroad than initially estimated.
The new figures indicate that the recovery had less momentum heading into the new year and add to concerns that recent lackluster economic data could signal even weaker growth in the first quarter.
In January, the Commerce Department estimated that total economic output, known as gross domestic product, expanded at a 3.2 percent annual rate in the final three months of last year.
The new figure, released Friday, was in line with economists’ expectations for the scheduled revision, which is based on updated data.
Growth at the end of the year fell off from a strong 4.1 percent annual rate in the July-through-September period and was the slowest pace since the first quarter of 2013.
Chris Rupkey, chief financial economist at Bank of TokyoMitsubishi in New York, noted that the growth slipped below the 3 percent level that many believe will provide “escape velocity” for the recovery.
“The economy had it and now has lost it,” he said.
“The first quarter is unlikely to be anything to write home about, although the colder-than-
seasonal weather will generate some growth from consumers turning up the thermostats in their homes,” Rupkey said.
Consumer spending grew at a 2.6 percent annual rate in the fourth quarter, down from the government’s initial 3.3 percent estimate.
Still, the figure was an improvement over 2 percent annual growth in the third quarter and the best consumer performance since the first quarter of 2012.
Exports of goods and services grew at a 9.4 percent annual pace in the fourth quarter, which was down from an 11.4 percent initial estimate. The revised export data still were strong, increasing at the fastest pace in three years.
Business investment was revised up to a 4.5 percent annual rate in the fourth quarter from the initial estimate of 3.4 percent. But it still was down dramatically from a 17.2 percent increase in the third quarter.
Federal Reserve Chair Janet L. Yellen told senators Thursday that extreme weather in much of the country could be causing recent weaker economic data.
She said that Fed officials might reconsider their recent pullback in stimulus efforts once they determine the weather effects.