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Economy grew 2.2% in Q4, new estimate unchanged

The government left its estimate of mild economic growth in the fourth quarter unchanged Friday, as stronger consumer spending was partly offset by reduced business investment. Gross domestic product expanded at a seasonally adjusted annual rate of 2.2% in the three months ended Dec. 31, unchanged from the previous second estimate, the Commerce Department said. Economists surveyed by Action Economics forecast a revision to 2.4%. And the government’s first estimate released in January was 2.6%.635629935947106041-GTY-179493170

The performance still marked a slowdown from a blistering six-month stretch in the middle of 2014 when growth averaged 4.8%, and is in line with the tepid pace so far in the nearly 6-year-old recovery. Last quarter, solid consumer and business spending were partly offset by government defense cuts and a strong dollar that’s hurting exports.

Consumer spending increased 4.4%, more than the 4.2% previously estimated, largely because of health care expenses. Exports were also stronger, rising 4.5%, vs. the 3.2% reported previously. A higher estimate for exports of services was reported, mainly in travel. And business stockpiling added to growth. The government had thought it was a drag.

But business investment rose 4.7%, slightly less than previously estimated, and it has been sluggish since August in part because the strong dollar has crimped exports and profits. Growth is expected to be dampened further in the current quarter by a continued downturn in exports, a pullback in business investment and harsh winter weather. But many economists expect the economy to pick up later in the year and grow about 3% for all of 2015.