At A Glance U.S. Fourth-Quarter GDP
- Momentum
GDP expanded at a 4.6% seasonally adjusted annual rate in the second quarter and 5.0% in the third, the best figure for a three-month span in 11 years. Advance figures for the final three months of the year show a slowdown in the pace, though overall growth remains positive. Using different measures, fourth-quarter GDP grew by 2.5% from the same period a year earlier, fairly consistent with post-recession performance. Growth for the entire year was 2.4% from 2013.
- Consumers
Consumers held up their end of the deal in the final quarter of the year. Friday’s report showed personal consumption expenditures rose 4.3%, the biggest gain since the first quarter of 2006. Americans have been particularly upbeat lately, with the Conference Board’s index of consumer confidence jumping to its highest since August 2007 this month. Stronger hiring and cheaper gasoline, which leave more discretionary income for most people, are likely behind the brighter outlook. Consumer spending accounts for about 70% of demand in the U.S. economy.
- Businesses
Business investment, another indicator of broader economic health, has been one recent trouble spot. A separate Commerce Department report out earlier this month showed the fourth straight monthly decline in orders for a key category of capital goods. Friday’s report showed spending on structures, equipment and products like software rose at a 1.9% pace in the fourth quarter. Such so-called nonresidential fixed investment added only .24 percentage point to GDP, the lowest figure since the second quarter of 2013. The cause for the slowdown isn’t entirely clear, though some economists think budget cuts in the oil and gas sector alongside weakness overseas may be squeezing some U.S. companies.
- Exports
The dollar has been rising against the euro, the yen and other currencies since midsummer, posing a challenge for U.S. exporters whose products are suddenly more expensive overseas. Friday’s report showed that exports rose at a 2.8% pace, a marked slowdown from the prior two quarters. Imports, meanwhile, surged, making trade an overall drag on GDP.
Government spending was another negative for growth in the final three months of the year. The big culprit was oft-volatile national defense spending, which plunged 12.5%. Nondefense spending only inched ahead at a 1.7% pace from the prior quarter. Overall, government activity subtracted 0.4% from GDP.
http://blogs.wsj.com/briefly/2015/01...p-at-a-glance/
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