WASHINGTON (Reuters) - U.S. economic growth was far stronger than previously estimated in the second half of 2013, which could help to explain a sharp drop in the unemployment rate during the period.
Gross domestic product increased at a 4.0 percent pace in the July-December period, according to the Commerce Department’s annual GDP revisions published on Wednesday. That compared to a previous estimate of 3.4 percent.
The economy grew at a 4.0 percent pace in the second quarter, the Commerce Department also reported on Wednesday.
The unemployment rate dropped 0.6 percentage point to 6.7 percent in the second half of last year. The stronger growth profile suggests the decline in the jobless rate was largely driven by improving labor market conditions rather than frustrated people giving up the hunt for work.
The government raised 2013 third-quarter growth to a 4.5 percent annual pace from the previous 4.1 percent. Growth for the fourth quarter of last year was lifted to a 3.5 percent annual rate from a previously reported 2.6 percent.
Growth for 2013 was raised to 2.2 percent from 1.9 percent.
The revisions reflected stronger consumer spending, business investment and exports than previously reported, and point to strong underlying momentum in the economy before it was slammed by an unseasonably cold winter in the first quarter of 2014.
The revisions also showed the economy was also not as weak as reported earlier this year. The government revised first-quarter GDP to show output contracting at a 2.1 percent pace instead of 2.9 percent.
Reporting by Lucia Mutikani; Editing by Paul Simao