By Martin Crutsinger
WASHINGTON: The economy grew at a 2.6 percent annual rate in the October-December quarter, slightly more than previously estimated, as consumer spending rose at the fastest pace in three years.
The fourth-quarter growth rate was a bit stronger than the 2.4 percent estimate made last month, the Commerce Department reported Thursday. The revision reflected stronger consumer spending, which rose at an annual rate of 3.3 percent — its best quarterly pace since 2010.
Even with the upward revision, growth in the overall economy slowed from a 4.1 percent pace in the July-September quarter. Analysts think growth has slowed even more in the current January-March period to around a 2 percent annual rate. A harsh winter has disrupted factory production and kept people away from shopping malls.
Once warmer weather appears, analysts are looking for a rebound in economic activity with consumer spending expected to be helped by pent-up demand.
Analysts viewed the upward revision as an encouraging sign showing that the economy had more momentum going into the first quarter than previously believed.
Sal Guatieri, senior economist at BMO Capital Markets, forecast that first quarter growth would slow to around 1.7 percent because of the winter disruptions but he said growth will likely rebound to around 3 percent in the April-June period. Many economists are forecasting that growth for the entire year will hit 3 percent. If so, it would make growth this year the strongest since 2005, two years before the nation plunged into the worst recession since the 1930s.