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2nd LD Writethru: U.S. economy grows by 2.6 pct in Q4

Xinhua, January 30, 2015 Adjust font size:

U.S. real gross domestic product(GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2014, below market expectation, the U.S. Commerce Department said Friday.

The economy grew 5 percent in the third quarter and 4.6 percent in the second quarter after contracting in the first quarter of 2014. In whole 2014, the economy expanded 2.4 percent, compared with an increase of 2.2 percent in 2013.

The department said in a statement that the decelerated GDP growth in the quarter primarily reflected an upturn in imports, a downturn in federal government spending and decelerations in nonresidential fixed investment.

The nonresidential fixed investment rose 1.9 percent in the quarter, lower than the 8.9 percent growth in the previous quarter; real exports growth slowed to 2.8 percent from the third quarter's 4.5 percent increase; and the federal government spending dropped 7.5 percent in the fourth quarter, in contrast to an increase of 9.9 percent in the third quarter.

Despite the slower business investment, the personal consumption registered strong growth in the quarter thanks to the lower oil prices and improved labor market. The personal consumption expenditures increased 4.3 percent in the quarter, the fastest single quarter since 2006 and making positive contributions to the GDP growth.

Due to the lower oil prices, the inflation remained muted in the fourth quarter and below the Federal Reserve's 2 percent target.

The personal consumption expenditures price index fell at a 0.5 percent rate in the quarter, the weakest reading since the first quarter of 2009. In the previous quarter, the index increased 1.2 percent. Endi