US economic growth braked more sharply than initially thought in the fourth quarter amid a slow pace of stock accumulation by businesses and a wider trade deficit.
US gross domestic product expanded at a 2.2% annual pace, revised down from the 2.6% pace estimated last month, the Commerce Department said.
The economy grew at a 5% rate in the third quarter. The fourth-quarter revision was generally in line with expectations.
With consumer spending accelerating at its quickest pace since the first quarter of 2006 and sturdy gains in other measures of domestic demand, the slowdown in growth is likely to be temporary.
Growth in consumer spending, which accounts for more than two-thirds of US economic activity, was revised down by one-tenth of a percentage point to a 4.2% pace in the fourth quarter, still the fastest since the first quarter of 2006.
A tightening labour market and lower fuel prices are likely to keep supporting domestic demand and help the economy navigate a turbulent global economy.
Business spending on equipment was revised to show it rising at a 0.9% rate instead of the previously reported 1.9% contraction.
A first-quarter acceleration is now in the cards, with data today showing a rebound in business spending intentions in January after four months of declines in a row.
With both business and consumer spending expanding in the fourth quarter, growth in final sales to domestic purchasers was revised to a 3.2% pace from the previous 2.8% rate.
Businesses accumulated $88.4 billion worth of inventory in the fourth quarter, far less than the $113.1 billion the government had estimated last month. That resulted in the GDP growth contribution from inventories being revised down to one-tenth of a percentage point from 0.8 percentage point previously.
The slower pace of inventory accumulation, however, will be a boost to first-quarter GDP growth.
Strong domestic demand sucked in more imports than previously reported, resulting in a trade deficit, which subtracted 1.15 percentage points from GDP growth, revised from the previously reported 1.02 percentage point drag.
US residential construction spending was revised down, while government spending was not as weak in the fourth quarter as previously reported.