Economy Grows at 3.2 percent Rate in Fourth Quarter of 2013

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the fourth quarter of 2013 according to the “advance” estimate released Thursday by the Commerce Department’s Bureau of Economic Analysis (BEA).  In the third quarter of 2013, real GDP increased 4.1 percent.

The combined growth in the last two quarters of 2012 represented the most robust six-month period of economic expansion in two years. The growth rate for Q4 2013 was roughly in-line with analyst and economist expectations.

The BEA said that the main drivers of growth in the fourth quarter was consumer spending and business investment. Consumer spending – the largest single factor in GDP measurement — jumped 3.3 percent while business investment grew 3.8 percent led by a 6.9 percent surge in equipment investment.

The main drags on economic growth were residential investment, which fell 9.8 percent, and federal government spending, down 12.6 percent compared to the third quarter.

The price index for gross domestic purchases, which informs inflation rates, increased 1.2 percent in the fourth quarter, compared with an increase of 1.8 percent in the third.

During 2013 real GDP increased 2.7 percent compared to 2.0 percent during 2012.  Inflation slowed in 2013 with the price index for gross domestic purchases increasing 1.1 percent during 2013, compared with an increase of 1.5 percent in 2012.