Economic growth grew faster than previously thought at the end of 2015, the Bureau of Economic Analysis reported Friday.
Adjusted for inflation, Gross Domestic Product grew at a 1 percent annual rate in the fourth quarter, revised up from the initial reading that showed meager 0.7 percent growth.
Economists had expected the growth rate to be revised down, making Friday’s news a welcome surprise for investors and officials worried about the health of the U.S. economy.
The revision added to the growth rate because businesses added more to their inventories than initially measured. Inventory growth is generally not predictive of growth in future quarters.
Even after the revision, however, the 1 percent growth rate was half what it was in the third quarter, and down from 3.9 percent in the second quarter.
The slowdown in GDP growth in the fourth quarter was in large part a reflection of slowing growth overseas: U.S. commerce was held back by falling exports and slowing oil production, attributable to a stronger dollar and collapsed oil prices. Slowing growth in China and elsewhere is partly to blame for those developments, officials at the Federal Reserve and elsewhere have claimed.
The U.S. is expected to recover from those setbacks in the months ahead, thanks to strong consumer spending and robust job growth. The Federal Reserve Bank of Atlanta’s GDP tracking model places first-quarter growth at 2.5 percent.
Fed officials project, and hope, that growth will come in at 2.4 percent for 2016. In the long run, they see 2 percent growth as the norm.
Friday’s report was the second of three estimates to be published about economic growth in the fourth quarter. The numbers in the GDP report are adjusted to smooth out seasonal fluctuations.
