Slow US growth may hide strength

The consensus forecast from Factset is that economic growth slowed sharply from October through December to an annual rate of 1.2 percent. That's down from a 3.1-percent rate in the July-September quarter and would be the slowest in nearly two years.

Growth will probably remain sluggish at the start of the year because Americans are coming to grips with an increase in Social Security taxes that has left them with less take-home pay.

But economists are cautioning that the Commerce Department report may also highlight underlying strengths that could propel the economy in the second half of 2013.

“This is not as bad as it looks,” said Nigel Gault, an economist at IHS Global Insight, who is forecasting a measly 0.3-percent expansion in the fourth quarter.

A key reason economists are not too worried is the weakness was probably the result of a number of one-time factors: slower growth in stockpiles, less government spending and a wider trade gap.

Those factors likely offset faster growth in consumer spending and the seventh straight quarter in which housing contributed to economic growth. Businesses may even have invested more in equipment and software.

Overall, the economy probably expanded at a roughly 2-percent annual rate in the second half of 2012 — about the same modest growth that has occurred since the recession ended three and a half years ago.

The subpar growth has held back hiring. The economy has created about 150,000 jobs a month, on average, for the past two years. That's barely enough to reduce the unemployment rate, which has been 7.8 percent for the past two months.

Economists forecast that unemployment stayed at the still-high rate again this month. The government releases the January jobs report Friday.

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