The figures for growth or contraction of a given economy are always subject to revision from the preliminary estimate as more hard data becomes available, making the reading of economic performance more reliable. Initial estimates of the US economy suggested that it had grown by 3.2% between October and December, however, as more data has become available, the US Department of Commerce has had to revise the figure down to 2.4% - quite a significant reduction, but still a (comparatively) healthy figure.
The poorer figure is said to be due to weaker than anticipated consumer spending in the final quarter of the year – when it traditionally sees a boost from spending on the Christmas festivities. In the event, consumer spending was up by 2.6% rather than the 3.3% that the Department of Commerce had estimated. It is reckoned that roughly 70% of all US economic output is consumed by the domestic market, so an easing of the consumer spending figures is significant.
It is also likely that the brinkmanship by US politicians over extending the US debt ceiling and their failure to agree a Federal budget in October, leading to a partial shutdown of the government and the “furlough” of up to 400000 employees will also have had an effect on consumer sentiment in the run-up to Christmas. Harsh winter conditions in Q4 (and also in this quarter) are also believed to cause a reduction in the GDP figure. Notably, vehicle purchases are believed to be adversely affected by the bad weather.
Even the more pessimistic figures should still be regarded as a strong result, according to the Markit organisation which produces a number of key indices. Chief economist for Markit, Chris Williamson gave the following analysis: "The details of the report suggest that investment is growing at an increased rate and underlying demand continued to expand at a reassuringly robust rate, given the headwinds during the closing months of 2013."
As a whole, US GDP for 2013 came in at 1.9%, but higher Federal taxes and spending cuts (including the “Sequester”), were estimated to have reduced the figure by as much as 1.5%.