The U.S. economy grew by 1.9% in the final quarter of Barack Obama’s presidency, unchanged from original estimates and held down by a bigger trade deficit even as consumer spending rebounded strongly.
The government’s second look at gross domestic product in the fourth quarter showed a bigger increase in consumer purchases than initially reported: 3% vs. 2.5%. What Americans spend has the biggest influence by far on GDP.
Yet the increase in what consumers spent was offset by somewhat smaller gains in business investment and local and state spending, revised government figures reveal. As a result, GDP was unchanged from the original estimate.
But what consumers spend should bode well for the economy in the months ahead. Household spending accounts for as much as 70% of U.S. economic activity.
Americans are able to spend more because of steady growth in an economy in which expansion is nearing its eighth anniversary. Millions of jobs have been created stateside since 2010, pushing the unemployment rate below 5% and resulting in rising wages as the labour market tightens.
