Consumers, trade seen boosting fourth-quarter growth

Tue Jan 28, 2014 4:33pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - Rising household spending and exports likely pushed the U.S. economy ahead at a decent clip in the fourth quarter, building a foundation for stronger growth this year.

Gross domestic product probably grew at a 3.2 percent annual rate, according to a Reuters survey of economists. While that expansion would be a step back from the third quarter's brisk 4.1 percent pace, its composition is expected to be healthier.

More of the growth should come from final demand and less from an accumulation of stocks in warehouses, although a further increase in inventories is expected.

"Consumer spending was one of the solid supports. The other was on the inventory front," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

In the third quarter, inventories rose $115.7 billion, adding 1.67 percentage points to GDP growth, and many economists expected an effort to sell off those stocks to bring growth to a sub-2-percent pace in the fourth quarter.

But a jump in consumer spending made the third quarter inventory build look prescient.

"A lot of people were expecting to see a swing the other way of the same magnitude. That has proven not to be the case," Bullard said.

Consumer spending is expected to be the main driver of fourth-quarter growth, but other segments of the economy such as trade and business investment are also seen lending a hand.   Continued...

Customers shop for meat at Wal-Mart in Rogers, Arkansas, June 4, 2009. REUTERS/Jessica Rinaldi