US Economy Ends 2013 with better Growth than Anticipated: MBA News

By QS Contributor Updated Sep 01, 2014

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Introduction
2014’s consumer spending slowdown attributed to weather
Commerce Department also releases details of corporate profits

US Economy Ends 2013 with better Growth than Anticipated: MBA News main image

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A new report from the Commerce Department has signaled larger growth in the US economy than was previously estimated.

In 2013’s final quarter, October through December, the US economy’s GDP grew by 2.6%. This puts growth at 1.9% for 2013 as a whole.

Key among factors in the final quarter’s improvement was a surge in consumer spending, which grew by 3.3% - the largest rise since the final three months of 2010, according to the Commerce Department report. The growth came most significantly from consumer spending on services, most notably on healthcare. Consumer spending as a whole represents almost 70% of the US economy.

2014’s consumer spending slowdown attributed to weather

However, these positive signs look to have been held up by wintry weather conditions in the New Year, caused by the ‘Polar Vortex’. December to February saw unusually heavy snow across the US, the 10th largest seasonal coverage since 1966 according to the National Climatic Data Center.

Current projections for the US economy’s first quarter of 2014 note a slowdown to 1.8% growth according to a median forecast of economists surveyed by Bloomberg.

Big retailers, such as Macy’s, are therefore waiting for a sustained period of more clement conditions to get a clearer indication of the true state of consumer spending in 2014. “We’ve had such up-and-down weather that it’s a little bit harder to know what’s weather, what’s the consumer, what’s really happening,” Karen Hoguet, Chief Financial Officer at Macy’s, said at a conference earlier this week.

Signs of further growth once the effects of winter have run their course are already in evidence. The US Labor Department, for example, reported that 175,000 workers were added by employers and that payrolls rose more than expected in February, with figures for March expected next week.

Commerce Department also releases details of corporate profits

The new report from the Commerce Department also includes details regarding corporate profits. These figures also highlight a positive end to 2013, with an increase in pre-tax earnings of 2.2% over the year’s fourth quarter, a slight increase over the previous quarter’s 1.9%. In total, corporate profits rose by just over 6% from the end of 2012.

Therefore, the stage may well be set for North America to start living up to the healthy growth in MBA job opportunities predicted by the 2013/14 QS TopMBA.com Jobs & Salary Report.