The US government slashed its estimate for fourth-quarter growth as consumer spending and exports were less robust than initially thought, leaving the economy on a more sustainable path of modest expansion. GDP expanded at a 2.4% annual rate, the Commerce Department said on Friday.
That was down sharply from the 3.2% pace reported last month and the 4.1% logged in the third quarter.
It is not unusual for the government to make sharp revisions to GDP numbers, as it does not have complete data when it makes its initial estimates. In fact, the latest figures will be subject to revisions next month as more information is received.
The revision left GDP just above the economy's potential growth trend, which analysts put somewhere between a 2% and 2.3% pace.
Consumer spending accounted for a large chunk of the revision after retail sales in November and December came in weaker than assumed.
Consumer spending was cut to a 2.6% rate, still the fastest pace since the first quarter of 2012. It had previously been reported to have grown at a 3.3% pace.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, contributed 1.73 percentage points to GDP growth, down from the previously reported 2.26 percentage points. As a result, final domestic demand was lowered two-tenths of a percentage point to a 1.2 percent rate.
The loss of momentum appears to have spilled over into in the first quarter of 2014, with an unusually cold winter weighing on retail sales, home building and sales, hiring and industrial production.