US economy grew at 0.1 percent rate in 4th quarter - MyFoxAustin.com | KTBC Fox 7 | News, Weather, Sports

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>>

  • Conference call: your bathroom break

    Conference call: your bathroom break

    Thursday, August 21 2014 10:47 PM EDT2014-08-22 02:47:23 GMT
    We asked several people what they do when they are on a conference call. Most of them answered: "The bathroom." Yes, according to a survey conducted by InterCall, 47 percent of 500 people admitted to taking a conference call from the bathroom.
    We asked several people what they do when they are on a conference call. Most of them answered: "The bathroom." Yes, according to a survey conducted by InterCall, 47 percent of 500 people admitted to taking a conference call from the bathroom.
  • The future of books and bookstores

    The future of books and bookstores

    Thursday, August 21 2014 8:46 PM EDT2014-08-22 00:46:06 GMT
    The advent of dedicated e-readers and other devices that allow us to read electronic books has dramatically changed the publishing industry as well as the book retail industry. As an avid reader, Julee Allen is always buying books. And she prefers to buy them in person at a book store. In this age of Kindles, Nooks and other e-readers, some may call Julee and others who prefer to buy actual books part of a shrinking breed.
    The advent of dedicated e-readers and other devices that allow us to read electronic books has dramatically changed the publishing industry as well as the book retail industry. As an avid reader, Julee Allen is always buying books. And she prefers to buy them in person at a book store. In this age of Kindles, Nooks and other e-readers, some may call Julee and others who prefer to buy actual books part of a shrinking breed.
  • Using your credit card rewards

    Using your credit card rewards

    Thursday, August 21 2014 5:56 PM EDT2014-08-21 21:56:50 GMT
    Cashing in your credit card points can be a great way to shop. You've earned them. But analysts say a lot of people don't use these rewards simply because they forget. Lauren Lyons Cole, a personal finance contributor for thestreet.com, has some tips on how you can make sure to make the most of your rewards.
    Cashing in your credit card points can be a great way to shop. You've earned them. But analysts say a lot of people don't use these rewards simply because they forget. Lauren Lyons Cole, a personal finance contributor for thestreet.com, has some tips on how you can make sure to make the most of your rewards.
Powered by WorldNow

KTBC FOX 7
119 East 10th Street
Austin, TX 78701

Phone: (512) 476-7777
Fax: (512) 495-7001

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