The US Commerce Department revised up real GDP growth to 1.0% at an annual rate in the fourth quarter in its second GDP estimate compared to a 2% increase in the third quarter.
Economists had expected that GDP growth would be revised down to 0.4% following the previously reported 0.7%.
For the year, the US economy grew 2.4% in 2015, matching the preliminary estimate.
Real GDP grew more than originally estimated largely due to strong inventory investment. According to experts, the country’s economy will grow at a faster pace in 2016 as the strengthening labor market and consumers’ savings on fuel will boost spending.
In October-December 2015, businesses accumulated $81.7 billion in inventories. As a result, inventories subtracted only 0.14% from GDP growth instead of the previously reported 0.45%.
Consumer spending growth was revised downward to 2.0% from 2.2%, thus contributing 1.38% to economic growth. Foreign trade subtracted 0.25% from 0.47% earlier reported.
The Commerce Department made revisions to third-quarter personal income. Wages and salaries rose by $78.2 billion from the previous three months, revised down from an initially reported $103.9 billion gain.
In the fourth quarter, personal consumption expenditures excluding food and energy, the Fed’s favorite inflation gauge, slowed down to 1.3% from 1.4% earlier. The preliminary estimate suggested growth to 1.2%.
