US economy grew at 0.1 percent rate in 4th quarter - FOX 35 News Orlando

US economy grew at 0.1 percent rate in 4th quarter

Posted: Updated:

WASHINGTON (AP) -- The U.S. economy grew at a 0.1 percent annual rate from October through December, the weakest performance in nearly two years. But economists believe a steady housing rebound and solid business and consumer spending is pushing growth higher in the current quarter.

The Commerce Department's revision to fourth-quarter growth was only slightly better than its initial estimate that the economy shrank at a rate of 0.1 percent. And it was well below the 3.1 percent growth rate reported for the July-September quarter.

The modest revision to the fourth-quarter gross domestic product was due to higher exports and more business investment.

GDP is the broadest measure of the economy's output. Sharp declines in defense spending and in company stockpiling held back growth in the fourth quarter.

Still, consumer spending and business investment -- two key drivers of growth -- accelerated at the end of last year. That indicated the economy would likely rebound in the current quarter.

Economists forecast that growth will pick up to an annual pace of about 1.5 percent in the January-March quarter despite higher Social Security taxes, which have reduced take-home pay for most Americans.

Growth at that pace is still relatively weak. And the economy could continue to struggle if policymakers in Washington cannot reach agreements over the budget his month, including billions of dollars in spending cuts that are set to begin on Friday.

Still, a raft of recent reports suggests that many aspects of the economy are improving. And many analysts predict growth will pick up later this year.

Hiring has picked up in recent months, providing more income. Employers have added an average of 200,000 jobs per month in the past three months. That's up from an average of 150,000 in the previous three months.

More jobs and ultra-low mortgage rates are helping the once-battered housing market recover. New home sales jumped 16 percent to their highest level in four and a half years in January.

At the same time, the number of new homes available for sale remains near record lows. That means builders will likely have to start construction on more homes and apartments to keep up with demand. That should create more construction jobs.

Home prices also rose in December compared to the same month a year ago by the most in more than six years. Rising home values also contribute to the housing recovery and the broader economy. They encourage more people to buy before prices rise further. Higher prices also build homeowners' wealth, which can spur more spending and economic growth.

Businesses and consumers are also showing greater confidence despite automatic spending cuts scheduled to take effect on Friday. A measure of consumer confidence rebounded in February after a sharp fall the previous month that likely was a result of the tax increase.

Companies, meanwhile, sharply increased orders for a category of long-lasting manufactured goods that reflect their investment plans. That suggests they are confident about their business prospects.

  • Your MoneyMore>>

  • Kraft recalls 96,000 pounds of Oscar Mayer wieners

    Kraft recalls 96,000 pounds of Oscar Mayer wieners

    Monday, April 21 2014 8:26 AM EDT2014-04-21 12:26:48 GMT
    Kraft Foods is recalling 96,000 pounds of its Oscar Mayer wieners because they may mistakenly contain cheese.  The U.S. Department of Agriculture's Food Safety and Inspection Service said that Kraft's "Oscar Mayer Classic Wieners" may instead contain the company's "Classic Cheese Dogs."
    Kraft Foods is recalling 96,000 pounds of its Oscar Mayer wieners because they may mistakenly contain cheese.  The U.S. Department of Agriculture's Food Safety and Inspection Service said that Kraft's "Oscar Mayer Classic Wieners" may instead contain the company's "Classic Cheese Dogs."
  • Prenuptial digital privacy clauses gain popularity

    Prenuptial digital privacy clauses gain popularity

    Monday, April 21 2014 6:08 AM EDT2014-04-21 10:08:56 GMT
    Realty TV star Kim Kardashian probably wished she did have one before she walked down the aisle with Kris Humphries. We might never have known about Tiger Woods' cheating ways if he had one. And figure skater Johnny Weir is insisting on one as part of his post-nuptial agreement. What is it? A digital privacy clause.
    Realty TV star Kim Kardashian probably wished she did have one before she walked down the aisle with Kris Humphries. We might never have known about Tiger Woods' cheating ways if he had one. And figure skater Johnny Weir is insisting on one as part of his post-nuptial agreement. What is it? A digital privacy clause.
  • Grocery-store etiquette

    Grocery-store etiquette

    Friday, April 18 2014 7:24 PM EDT2014-04-18 23:24:07 GMT
    Whether barricading shopping aisles with abandoned carts, massaging every piece of fruit in the building, or blankly staring at a shelf of items so no one else can pick one, grocery store pests can turn a quick trip to restock your fridge into a nightmare.
    Whether barricading shopping aisles with abandoned carts, massaging every piece of fruit in the building, or blankly staring at a shelf of items so no one else can pick one, grocery store pests can turn a quick trip to restock your fridge into a nightmare. In the hope of gently educating those unclear on grocery-shopping etiquette, we asked you to help us put together a list of what not to do.
Powered by WorldNow

35 Skyline Drive
Lake Mary, FL 32746

Phone: (407) 644-3535
News Tips: (866) 55-FOX35

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices