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Can Business Spending Relieve the Consumer? - Real Time Insight

Posted: 2/28/2014 9:50:00 AM
Referenced Stocks: MSO;PJC

Revised GDP growth matched consensus, more or less.  Real U.S. GDP expanded at a +2.4% annual pace in Q4-13 instead of +3.2% as originally reported.  

Consumers did not spend quite as much, the refreshed government data said. Consumer spending growth was lowered to +2.6% from +3.3%.  U.S. consumers spent less than initially calculated on big-ticket items such as autos, appliances, and electronics.

Reduced estimates for U.S. export growth, and fall in inventory spending, and a sharper decline in government spending also contributed to the downward revision.

Folks, that's a pure "muddle-through" rate of demand expansion. Exclude inventories, and final sales of U.S. goods and services were trimmed to +2.3% from +2.8%.   

One major positive showed its face. Company spending on equipment - a key signal of improved business conditions - was revised up to show a +10.6% gain versus +6.9%.

Inflation as measured by the PCE index was little changed, rising at a +1% annual pace or by +1.3% excluding food and energy. 

My RTI question:  Can Business Spending Relieve the Consumer?

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