Economic growth disappoints; slows to 2.6 percent in fourth quarter

The U.S. economy ended the year on a disappointing note, growing slightly less than many expected to close out 2014.

The nation’s gross domestic product climbed just 2.6 percent in the fourth quarter, according to a report out Friday from the Bureau of Economic Analysis. In the third quarter, it climbed 5 percent.

{mosads}However, there were some positive takeaways from the report. Personal consumption, which accounts for the majority of the nation’s economy, was up at the end of the year, increasing 4.3 percent compared to 3.2 percent in the third quarter.

Furthermore, personal income climbed at a faster rate in the fourth quarter than in the third, buoyed by higher increases in wages.

The slowdown in growth was primarily attributed to a decline in federal government spending, an increase in imports (and decrease in exports), and a slowdown in nonresidential fixed investment.

The White House touted Friday’s numbers as “consistent with a broad range of other indicators showing solid improvements” in the economy.

“Today’s report affirms the underlying pattern of resurgence in the economy,” said Jason Furman, chairman of Obama’s Council of Economic Advisers.

Furman said the backbone of the economy remains strong, citing the accelerating growth in personal spending and fixed investment. Rather it was “more volatile factors” like government spending that took a bite out of fourth quarter economic growth, he argued.

Republicans said the new data showed the economy was still growing at an “anemic pace” under Obama.

“Last year, the U.S. economy grew by 2.4 percent — that’s in line with the average growth rate of 2.3 percent during the 22 quarters of this recovery,” said Rep. Kevin Brady (R-Texas). “That’s not good enough for hardworking families on Main Street.”

The initial estimate of fourth quarter growth comes after the Commerce Department reported in December that the economy grew between June and September at the fastest pace seen in over a decade.

That report, coupled with other promising economic indicators, has led President Obama to strike an optimistic tone about an economy that is finally back on its feet. The president called 2014 a “breakthrough year” for the nation in his State of the Union address.

“The shadow of crisis has passed, and the State of the Union is strong,” he said.

The economy grew 2.4 percent over the course of all of 2014, good for the strongest year of growth since 2010.

At the same time, Obama and Democrats are hammering on an economic inequality message, noting that the gains felt by the economy are disproportionately enjoyed by those making the most money, while wages for the lower and middle classes have barely budged.

This story was updated at 10:13 a.m.