DUBAI

The oil bust is hitting business investment, but the US economy is doing just fine

Slowing down in the gas patch, but consumers are picking up the slack.
Slowing down in the gas patch, but consumers are picking up the slack.
Image: AP Photo/Eric Gay
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The US economy expanded by 2.4% in 2014, as growth in the fourth quarter came in somewhat below analyst expectations.

The economy expanded by 2.6% in the fourth quarter, slowing down from a 5% rate in the third quarter. Analysts had expected growth of more than 3%.

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A decline in business investment in equipment weighed on the economy’s performance. Some analysts had expected such a downturn, amid the sharp downturn in oil prices. Oil and gas drilling and related machinery makes up about 10% of business investment and 1% of GDP, according to Morgan Stanley analysts.

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On the other hand, personal spending was juiced by the decline in energy costs, which act as a tax cut for American workers, freeing up some of their cash to be spent elsewhere. Personal consumption spending rose 4.3% compared to 3.2% in the third quarter.

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