Feb. 28 - GDP data show the U.S. economy barely budged in the fourth quarter, but economists remain optimistic about the current quarter, despite looming spending cuts. Bobbi Rebell reports.
Revised GDP missed the mark- but the economy is hardly a mess. New data from the government showed the economy actually grew in the fourth quarter- revised from down a tenth of a percent to up that same amount- and while economists were disappointed in that number- they are already pointing to signs of better days to come. IHS Global Insight Chief U.S. Economist Nigel Gault: SOUNDBITE: NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "Consumer spending still growing, housing sector, housing starts, housing sales continuing to move up; and on the business investment side business orders for capital equipment, after a big dip around the middle part of last year, those have come back quite strongly. So I think a lot of the fundamentals or private demand are looking OK which means that growth should do better as we go into 2013. " Other reports showed a better than expected drop in claims for new jobless benefits, and a sharp rise in factory activity in the Midwest to its highest level in nearly a year. And while there is concern about the spending cuts due to sequestration likely to come from Washington- Barclay's Michael Gapen says it won't be as bad as the barely-averted fiscal cliff. SOUNDBITE: MICHAEL GAPEN, SENIOR ECONOMIST, BARCLAYS (ENGLISH) SAYING: "If they go in, in their current form they are likely to subtract about a half a percentage point off of GDP. So, on the one hand they are nowhere near the size and impact that the full fiscal cliff would have had. They are only one component of the fiscal cliff, so sequester for the whole annual year probably would have brought in $85 to $90 billion cuts remember the full fiscal cliff was estimated at about $650 billion." Gapen believes the economy will gain more strength in the second half of the year thanks in large part to the building strength in the housing sector and the consumer spending that follows.