Q4 GDP Growth Better Revised Upwards to 2.5%

US GDP, a measure of total goods and services output within U.S. borders, grew at a 2.5% annual rate during Q4 2006, higher than the 2.2% reported a month ago, and up from 2% in the third quarter, according to the Commerce Department, reports Reuters. 

Business investment spending fell at a 3.1% annual rate in the fourth quarter rather than the 2.4% decline the government estimated a month ago and a 10% jump in third-quarter. 

Spending on new-home building plummeted by 19.8%, after an 18.7% drop in the third quarter. It was the fifth quarter in a row that residential spending has fallen and the steepest since a 21.7% plunge in the first quarter of 1991.

Many analysts forecast that GDP growth will ease to 2% or less in the first quarter ending March 31. During the full-year 2006, GDP expanded 3.3%, topping 3% for the third year in a row after growth of 3.2% in 2005 and 3.9% in 2004.

The department said companies added to inventories at a $22.4-billion annual rate in the closing quarter of 2006 rather than the $17.3 billion rate it reported a month ago and said that was the main reason for the upward revision in fourth-quarter GDP.

A prices gauge favored by the Federal Reserve -- personal consumption expenditures excluding food and energy items -- advanced at a slightly slower 1.8% annual rate in the fourth quarter, down from 2.2% in the third quarter.

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