US economy grew at 0.1 percent rate in 4th quarter - Los Angeles Local News | FOX 11 LA KTTV

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>>

  • Future of money

    Future of money

    Thursday, April 17 2014 1:27 PM EDT2014-04-17 17:27:18 GMT
    These days, when you check out of a grocery store, your toughest choice might be cash or credit.  But in a few years, there may be no need to carry dollar bills, credit cards, or stacks of cash.  It might sound like the stuff of science fiction but futurist and social scientist Heather Schlegel says it's not.
    These days, when you check out of a grocery store, your toughest choice might be cash or credit.  But in a few years, there may be no need to carry dollar bills, credit cards, or stacks of cash.  It might sound like the stuff of science fiction but futurist and social scientist Heather Schlegel says it's not.
  • IRS considers taxing work freebies like food

    IRS considers taxing work freebies like food

    Wednesday, April 16 2014 9:11 PM EDT2014-04-17 01:11:44 GMT
    In competitive job markets like Silicon Valley, companies are doing everything they can to entice the best and brightest -- offering freebies that have become the stuff of legend.Employee perks like free food at lavish cafeterias, laundry and even yoga are not unheard of.  But the taxman could soon crack down.  The IRS reportedly is looking at these perks and seeing if these companies need to start paying up for the free stuff they offer employees.
    In competitive job markets like Silicon Valley, companies are doing everything they can to entice the best and brightest -- offering freebies that have become the stuff of legend.Employee perks like free food at lavish cafeterias, laundry and even yoga are not unheard of.  But the taxman could soon crack down.  The IRS reportedly is looking at these perks and seeing if these companies need to start paying up for the free stuff they offer employees.
  • Social streaming video from your iPhone with YEVVO

    Social streaming video from your iPhone with YEVVO

    Wednesday, April 16 2014 8:46 AM EDT2014-04-16 12:46:01 GMT
    We met YEVVO's 26-year-old co-founder and CEO, Ben Rubin, on a rainy day in Madison Square Park. Among the four of us (Ben, me, my photographer, and the representative from Ben's PR firm), we had four smartphones and the free app Rubin created."What if you were going live during this interview and then somebody [online] started asking questions and then [that somebody] actually helped to create the content?" Rubin asked.
    We met YEVVO's 26-year-old co-founder and CEO, Ben Rubin, on a rainy day in Madison Square Park. Among the four of us (Ben, me, my photographer, and the representative from Ben's PR firm), we had four smartphones and the free app Rubin created."What if you were going live during this interview and then somebody [online] started asking questions and then [that somebody] actually helped to create the content?" Rubin asked.
Powered by WorldNow

KTTV FOX 11
1999 S. Bundy Dr.
Los Angeles CA 90025

Main: (310) 584-2000
News Tips? (310) 584-2025

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