US GDP Growth Slows to 0.7% in Q4

The US economy expanded an annualized 0.7 percent on quarter in the last three months of 2015, lower than a 2 percent expansion in the previous period, according to the advanced estimate released by the Bureau of Economic Analysis. Figures came slightly below market expectations of 0.8 percent, as consumer spending eased, nonresidential investment shrank for the first time in nearly three years and a strong dollar and weak global demand brought exports down.

Personal consumption expenditure (PCE) contributed 1.46 percentage points to growth (2.04 percent in Q3) and rose at a slower 2.2 percent (3 percent in Q3). Spending on both durable goods (4.3 percent from 6.6 percent in Q3) and nondurable goods (1.5 percent from 4.2 percent in Q3) grew at a slower pace and consumption in services also increased less (2 percent from 2.1 percent). 

Fixed investment added a meager 0.03 percentage points to growth (0.6 percent in Q3) and expanded 0.2 percent (3.7 percent in Q3). Nonresidential investment shrank 1.8 percent, following a 2.6 percent gain in the previous period, mainly due to lower structures (-5.3 percent from -7.2 percent in Q3) and equipment investment (-2.5 percent from 9.9 percent in Q3). Residential investment increased 8.1 percent, the same as in the previous period. 

Private inventories subtracted 0.45 percentage points from the growth, lower than 0.71 percent in the previous quarter. 

Meanwhile, exports shrank 2.5 percent, after a 0.7 percent rise in the third quarter and imports rose at a slower 1.1 percent (2.3 percent in Q3), bringing the impact from trade to -0.47 percentage points (-0.26 in Q3).

Government spending and investment added 0.12 percentage points to growth, down from 0.32 percent in the third quarter. 

In 2015, the US economy advanced 2.4 percent, the same as in 2014. There were offsetting movements in the components: decelerations in nonresidential fixed investment (2.9 percent in 2015 from 6.2 percent in 2014) and in exports (1.1 percent from 3.4 percent) and an acceleration in imports (5.0 percent from 3.8 percent) were offset by accelerations in personal consumption (3.1 percent from 2.7 percent) and in residential fixed investment (8.7 percent from 1.8 percent) , a smaller decrease in federal government spending (-0.3 percent from -2.4 percent), and accelerations in private inventory investment and in state and local government spending (1.4 percent from 0.6 percent).

US GDP Growth Slows to 0.7% in Q4

BEA | Joana Taborda |
1/29/2016 2:06:53 PM