WASHINGTON—The U.S. economy's fourth quarter growth was revised slightly downward in the Commerce Department's second estimate.
NAFCU Chief Economist and Vice President of Research Curt Long said the revised estimate is due to "a larger drag from inventory accumulation than previously thought."
The department's Bureau of Economic Analysis' second fourth quarter estimate released this week revised the economy's growth to 2.5% from its initial estimate of 2.6%.
Long noted that residential investments were revised upward in the second estimate, but inventory accumulation, business investment and government spending were lower than initially indicated.
"After the revision, GDP growth for the year of 2017 remained at a modest 2.3%," Long said. "Data available so far suggests solid economic growth in the first months of 2018. The effects of a tightening labor market and tax cuts should contribute to accelerating growth later this year."
Personal consumption expenditure (PCE) inflation, the Federal Reserve’s preferred inflation metric, was revised down to 2.7% in the fourth quarter's second estimate. Meanwhile, core PCE inflation (excluding food and energy) increased 1.9% during the quarter. For 2017, PCE and core PCE rose by 1.7% and 1.5%, respectively.