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We had some major economic reports earlier today, including a second-estimate on US GDP for the last quarter of 2013 and February’s final read on the University of Michigan’s index of consumer sentiment. As I suggested yesterday, the impact of an upbeat outcome for the latter has held a far greater sway on the stock market than the less-timely former.
Consumer sentiment rose to a final reading of 81.6 for February, up from the 81.2 level seen both mid-month and at the end of January. This is a bullish sign, showing that the attitude of consumers has not been brought down by the harsh winter weather. With the expectations component of the index driving the headline gains, consumers are optimistic about the near future and giving cause to hope for a bounce in consumer spending, the lifeblood of the US economy, when more favourable temperatures arrive.
Fourth-quarter GDP was revised down from an originally-reported 3.2% to 2.4%, quite a slowdown from the 4.1% seen in the third quarter. The impact of this result was limited, however, as it was not far from the consensus estimate of 2.5%. So although growth was not as punchy in the fourth quarter as initially estimated, this outcome was already well-anticipated.