Revised data released by the Commerce Department on Thursday showed U.S. gross domestic product jumped by slightly more than originally estimated in the fourth quarter of 2020.
The Commerce Department said GDP surged up by 4.1 percent in the fourth quarter compared to the previously reported 4.0 percent spike. The upward revision matched economist estimates.
The slightly stronger than previously estimated GDP growth reflected upward revisions to residential fixed investment, private inventory investment, and state and local government.
However, the upward revisions were partly offset by a modest downward revision to consumer spending, which surged up by 2.4 percent compared to the previously reported 2.5 percent jump.
Gregory Daco, Chief U.S. Economist at Oxford Economics, said a “worsening health situation, slower employment gains and dwindling fiscal aid limiting the consumer spending advance.”
“Strong housing activity and resilient business investment helped offset the consumer spending softness at the end of last year,” Daco said.
Despite the slight upward revision, the increase in GDP in the fourth quarter still reflected a significant slowdown from the 33.4 percent spike seen in the third quarter of 2020.
The report also showed growth in core consumer prices, which exclude food and energy prices, slowed to 1.4 percent in the fourth quarter from 3.4 percent in the third quarter.
Looking at the current quarter, Daco said, “The combination of fiscal stimulus and improving health conditions at the start of 2021 have led to a string of positive economic surprises which, in turn, have led us to revise our GDP tracker to 7.2% (annualized) in Q1.”
“Thereafter, we anticipate a summer mini boom in activity juiced-up by reduced virus transmission, increased vaccine diffusion, and generous fiscal stimulus,” he added.
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