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Q4 GDP revised sharply downward

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Q4 GDP revised sharply downward

Consumer spending not as robust as first estimated.

It appears that the economy wasn’t quite as strong in the fourth quarter of last year as previously thought.

The Commerce Department today revised fourth quarter GDP growth downward to 2.4% from its previous estimate of 3.2%.  Analysts had expected growth to be revised to 2.5%.

"For all of 2013, GDP growth was a tepid 1.9%."

The primary drivers for the reduction in Q4 growth were consumer spending and exports, both of which came in lower than the previous estimate.  Spending – or personal consumption expenditures – was revised to an increase of 2.6% for the quarter, while exports came in at a 9.4% increase.

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Many observers – including the all-important Chairman of the Federal Reserve, Janet Yellen – believe that the slower pace of growth is temporary, driven in large part by the harsh winter experienced by much of the country.  In remarks last week to Congress, Yellen indicated that the recent slowing of growth would have no impact on the Fed’s “tapering” plan to reduce the amount of monetary stimulus over the coming months.



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