Here is an excerpt from the Bureau of Economic Analysis news release:
Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.
The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4 and “Comparisons of Revisions to GDP” on page 5). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 26, 2016. The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and federal government spending that were partly offset by negative contributions from private inventory investment, exports, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the fourth quarter primarily reflected a deceleration in PCE and downturns in nonresidential fixed investment, in exports, and in state and local government spending that were partly offset by a smaller decrease in private inventory investment, a deceleration in imports, and an acceleration in federal government spending.
Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 1.1 percent in the fourth quarter, compared with an increase of 2.2 percent in the third. [Full Release]
Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was calculated annually. To be more precise, the chart shows is the annualized percent change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.24% average (arithmetic mean) and the 10-year moving average, currently at 1.39 percent.
Note: The headline 0.7% GDP is 0.69% at two decimal places.
Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 14.7% below trend, the largest negative spread in the history of this series.
A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change.
In summary, the Q4 GDP Advance Estimate of 0.7 percent was in line with mainstream estimates and well below the 2.0 percent Q3 Third Estimate.
This article is brought to you courtesy of Jill Mislinski from Advisor Perspectives.