US economic growth rate revised down

Cars in Chicago An unusually harsh US winter has cut into vehicle sales

The US economy grew at a much slower rate from October to December than originally predicted, the US Commerce Department said.

US gross domestic product (GDP) grew at an annualised rate of 2.4% in the fourth quarter of 2013, down from an initial estimate of 3.2%.

The revision is down to weaker than expected consumer spending.

Severe winter weather in the US is expected to slow growth further in the current quarter.

The Commerce Department initially predicted consumer spending had expanded by 3.3%, but spending is now estimated to have grown at a 2.6% annual rate.

Consumer spending accounts for roughly 70% of US economic activity.

Bad winter weather has cut into vehicle sales, among other purchases.

Despite the revised GDP estimate, US growth should be regarded as strong, the financial information firm Markit said.

"The details of the report suggest that investment is growing at an increased rate and underlying demand continued to expand at a reassuringly robust rate, given the headwinds during the closing months of 2013," said Markit chief economist Chris Williamson.

For all of 2013, the economy grew at 1.9%.

Spending cuts

Last year, government spending cuts and higher federal taxes squeezed GDP growth.

Economists estimate that the contraction in public spending and higher taxes knocked about 1.5% from growth last year.

The measures were put in place to try to counter soaring budget deficits.

Some economists think growth will start to pick up in the spring.

Federal Reserve chair Janet Yellen said on Thursday that the central banking system expected the US economy to strengthen this year, lowering unemployment.

The Fed is gradually reducing its monthly bond purchases, in an effort to keep long-term loan rates low and encourage spending and growth.

It reduced its original $85bn (£51bn) monthly bond purchases by $10bn in December and January in steps, down to a current level of $65bn.

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