The U.S. economy probably grew in the fourth quarter at the weakest pace in almost two years as a pickup in spending drained inventories and exports slumped, economists said before a report today.
Gross domestic product rose at a 1.1% annual rate, down from a 3.1% gain in the prior three months and the least since the first quarter of 2011, according to the median forecast of 83 economists surveyed by Bloomberg. Consumer purchases, the biggest part of the economy, probably accelerated.
Bolstered by a drop in fuel prices and rising incomes, households overcame Superstorm Sandy, a bitter presidential contest and Washington budget battles. The gain in spending may be difficult to sustain this quarter as a tax increase takes a bigger chunk from paychecks, one reason why U.S. Federal Reserve policy makers, meeting today, are projected to press on with plans to pump money into the world’s largest economy.
The Commerce Department’s report was due at 8:30 a.m. in Washington. Economists’ estimates for GDP, the volume of all goods and services produced in the U.S., ranged from 0.3% to 2.1%.
Later in the day, a statement from Fed policy makers at the end of their two-day meeting may say the central bank will continue its unprecedented balance-sheet expansion. The Federal Open Market Committee will renew its commitment after determining the benefits from the program exceed any risk of inflation or financial instability, according to economists surveyed last week.
The GDP data may show consumer spending grew at a 2.1% annual rate last quarter after advancing 1.6% from July through September, economists predicted.
Retail sales rose more than forecast in the final month of the quarter, helped by job gains, rising house values and cheaper gasoline prices in addition to discounting by chains such as Macy’s Inc.
Automobile purchases also are spurring demand. Cars and light trucks sold at a 15.3-million-unit annual rate in December after 15.5 million the prior month, the best back-to-back showing since early 2008, according to an industry watchdog.
