POLITICS: PennAve

Final tally: Economy grew at 2.6-percent rate in fourth quarter

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Treasury,PennAve,Joseph Lawler,Economy,Federal Reserve,Jack Lew,Janet Yellen,GDP

The U.S. economy grew at a 2.6-percent annual rate in the fourth quarter of 2013, the Bureau of Economic Analysis reported in its third and final estimate of real gross domestic product Friday.

The BEA had initially estimated that growth was 3.2 percent, but that was revised down to 2.4 percent before being again revised up to reflected stronger-than-realized consumer spending.

That means that growth slowed at the end of 2013 after accelerating through the year. From near-stagnation in the fourth quarter of 2012, quarterly growth was 1.1 percent, then 2.5 percent, and then 4.1 in the third quarter, which was marked by the government shutdown and debt limit standoff.

But the downward revisions to fourth-quarter GDP break that trend.

Previously, top economic officials had expressed hope that the improvement would last into 2014. Treasury Secretary Jack Lew said in January that 2014 "can and should be a breakthrough year for our economy."

Federal Reserve Chairwoman Janet Yellen said in January, before taking office, that she was "hopeful that the first digit [of real GDP growth] could be three rather than two."

But many banks have cut their forecasts for 2014. Goldman Sachs now projects first-quarter real GDP growth at 1.7 percent.

Other analysts have noted that it's hard to separate the underlying strength of the economy from the unusually harsh weather that may have slowed spending and delayed business plans throughout the winter. If weather is mostly to blame for depressed commerce early in 2014, growth would be expected to bounce back later in the year.

Nevertheless, the Federal Reserve monetary policy committee cut its own projections for 2014 growth last week, estimating that 3-percent growth would be the upper bound of the central range of its projections. Previously, Fed officials had seen growth as high as 3.2 percent.

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