Posted on 01/30/2015 12:33:51 PM PST by SeekAndFind
US GDP growth fell short of expectations in last year's fourth quarter, the government reports. National output increased 2.6% in the final three months of 2014 vs. the previous quarter (seasonally adjusted annual rate). The consensus forecast was looking for something bettera 3.2% rise, according to Econoday.com's survey of economists.
The soft number for headline growth in Q4 is a bit surprising when you look at the statistical elephant in the room, namely, consumer spending, which accounts for nearly 70% of GDP. Personal consumption expenditures accelerated to a 4.3% pace in the fourth quarter, a handsome improvement over Q3's 3.2% rise. Meanwhile, disposable personal income growth accelerated to 3.8% in Q4 vs. 2.0% in Q3a bullish sign for consumer spending in the near term.
So, why the lesser pace of growth for headline GDP? Part of the explanation is due to the slide in government expenditures, which fell 2.2% in Q4. That's a fairly large reversal from Q3's 4.4% gain. A faster growth rate for imports vs. exportsaka a bigger trade deficitalso weighed on headline GDP. Another corner of disappointment: business spending on equipmenta measure of corporate confidence in the economic outlookslumped 1.9% in Q4, although it follows back-to-back gains of 11.0%-plus in each of the previous quarters and so some of this may be payback after a run of strength.
The good news is that the general trend in the private sector still looks encouraging. That's not surprising, given the run of (mostly) upbeat monthly data published lately. I expect that today's preliminary estimate of Q4 GDP will be revised up in the months to come. My GDP forecast from earlier this weeka relatively objective econometric reflection of data published to dateanticipated a 3.6% increase for today's number. That's obviously a bit too strong given today's release. But considering that business-cycle risk for the US remains low at a time when the labor market has been expanding at a faster rate, today's initial GDP data probably underestimates the economy's forward momentum in last year's final quarter.
Unexpected LOL!
Oldplayer
Yeah, as long as Obama is printing money for Wall Street....
Such B.S. that comes out of obammy inc.
What happened to cnbc’s Rosy Scenario, who beguiles the anchors of their various vacuous shows with promises that “happy days are here again,” until the numbers come out and they aren’t here yet? It happens every year remarkable that they have even their tiny audience.
Govt expenditures should NOT be included in GDP to ascertain true GDP economic growth.
I think the 3rd quarter’s numbers were fudged and the real numbers were not 5.0% GDP growth, and someday, I may be proven right. That won’t change some November close elections where some Dims barely squeaked thru, aided by the government report meant to mean Obama was doing O.K.
This exact situation is what liberals always point to as proof as to why we “need” stimulus.
To me, when you stop drinking the sauce, there’s a hangover first before you can get better.
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