The last three months of 2013 were not as strong as first thought. The Commerce Department now says real fourth-quarter US GDP was up 2.4%, not 3.2% as first estimated. For the year, then, RGDP was up 2.5% (fourth quarter over fourth quarter) vs. 2.0% in 2102. Some explanation from Paul Ashworth of Capitol Economics:
… Federal government shutdown resulted in a 5.6% drop in public sector spending, which subtracted more than 1.0% ppts from overall GDP growth. Durable goods consumption is now estimated to have increased by a more modest 2.5% in the fourth quarter, down from the initial 5.9% estimate. … Net exports are now assumed to have added 1.0% ppt to GDP growth, rather than the initial contribution of 1.3%. Inventories added 0.1%, down from the initial 0.4% estimate. The good news is that business investment increased by 7.3%, revised up from the initial estimate of a 3.8% gain. That gain helped to offset an 8.7% decline in residential investment, which was hit by the drop back in existing home sales that has reduced brokers’ commissions.
Still not so bad given a year of tax-heavy fiscal austerity, But not great either. So as we move forward through this fifth full year of an anemic recovery/expansion after the Great Recession, where do things stand? A new Congressional Budget Office blog post offers two key stats from its calculations:
1. CBO estimates that GDP was 7½% smaller than potential (maximum sustainable) GDP at the end of the recession; by the end of 2013, less than one-half of that gap had been closed.
2. Employment at the end of 2013 was about 6 million jobs short of where it would be if the unemployment rate had returned to its prerecession level and if the participation rate had risen to the level it would have attained without the current cyclical weakness.
A ways to go before we return to the old normal. Of course 2014 was supposed to be a year of acceleration, one that may have slipped on the ice thanks to a severe winter. Spring cannot come to soon. As Chance the gardener put it in the film, Being There:
In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again. As long as the roots are not severed, all is well. And all will be well in the garden. There will be growth in the spring!