U.S. fourth-quarter growth is likely to be revised higher after services industry data on Wednesday suggested a much stronger pace of consumer spending than the government had previously assumed, according to economists.
The government last month slashed its gross domestic product estimate for the October-December quarter to a 2.4 percent annual pace from a previously reported 3.2 percent rate.
JPMorgan and forecasting firm Macroeconomic Advisers said the quarterly services survey, from which the government’s estimates for services consumption is derived, showed a much more robust pace of consumer spending in the fourth quarter than the government’s estimated 2.6 percent rate.
“We now believe real consumption increased 3.4 percent,” said Silver in a research note. “We are raising our tracking estimate of fourth quarter real GDP growth to 3.0 percent.”
Macroeconomic Advisers raised its tracking estimate of fourth-quarter GDP growth by five-tenths of a percentage point to 2.9 percent.
“Key components of the quarterly services survey were above the government’s assumption, with the largest positive surprise at non-profit hospitals,” said Ben Herzon, a senior economist at Macroeconomic Advisers in St. Louis.
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