Fourth-quarter economic growth cut to 2.4%

WASHINGTON -- Fourth-quarter economic growth was revised down sharply Friday to 2.4% as new data showed consumers opened their wallets less in the face of severe weather and businesses sold fewer goods abroad than initially estimated.

The new figures indicate the recovery had less momentum heading into the new year and add to concerns that recent lackluster economic data could signal even weaker growth in the first quarter.

Last month, the Commerce Department estimated total economic output, known as gross domestic product, expanded at a 3.2% annual rate in the final three months of last year.

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The new figure released Friday was in line with economists’ expectations for the scheduled revision, which is based on updated data.

Growth at the end of the year fell off from a strong 4.1% annual rate in the July-through-September period and was the slowest pace since the first quarter of 2013.

Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York, noted that the growth slipped below the 3% level many believe will provide “escape velocity” for the recovery.

“The economy had it and now has lost it,” he said.

“The first quarter is unlikely be anything to write home about, although the colder-than-seasonal weather will generate some growth from consumers turning up the thermostats in their homes,” Rupkey said.

Consumer spending grew at a 2.6% annual rate in the fourth quarter, down from the government’s initial 3.3% estimate.

Still, the figure was an improvement over 2% annual growth in the third quarter and the best consumer performance since the first quarter of 2012.

Exports of goods and services grew at a 9.4% annual pace in the fourth quarter, which was down from an 11.4% initial estimate. The revised export data still were strong, increasing at the fastest pace in three years.

Business investment was revised up to a 4.5% annual rate in the fourth quarter from the initial estimate of 3.4%. But it still was down dramatically from a 17.2% increase in the third quarter.

Federal Reserve Chairwoman Janet L. Yellen told senators Thursday that extreme weather in much of the country could be causing recent weaker economic data.

She indicarted that Fed officials could reconsider their recent pullback in stimulus efforts once they determine the weather effects.