GDP Declined at a 3.8% Annualized Rate in the 4th Quarter
The Bureau of Economic Analysis (BEA) released its “advance” estimate of -3.8% annualized growth in the inflation-adjusted (“real”) gross domestic product (GDP) for the 4th quarter (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm). In the 3rd quarter, real GDP declined at a 0.5% annualized rate.
Highlights of today’s GDP report:
The decline in real GDP in the 4th quarter primarily reflected a decline in exports (down 19.7%—the first decline since the 2nd quarter of 2003—vs. a 3% increase in the 3rd quarter), declining consumer spending (down 3.5% vs. a decline of 3.8% in the 3rd quarter), declining residential investment (down 23.6% vs. a 16.0% decline in the 3rd quarter), and declining equipment and software spending (down 27.8% vs. a 7.5% decline in the 3rd quarter).
Those declines were partly offset by positive contributions from inventory investment (the real change in inventories added 1.32 percentage points to the 4th quarter change in real GDP after adding 0.84 percentage point to the 3rd quarter change) and federal government spending (up 5.8% vs. a 13.8% increase in the 3rd quarter). Imports, which are a subtraction in the calculation of GDP, declined at a 15.7% annualized rate (vs. a decline of 3.5% in the 3rd quarter).
The acceleration of the decline in GDP relative to the 3rd quarter mostly reflected a downturn in exports a much larger decrease in equipment and software.
Residential investment has declined for 12 consecutive quarters, reducing real GDP growth over that period by an average of 0.91 percentage point.
Over that same period, export growth has added to real GDP growth by an average of 0.68 percentage points.
However, exports pulled growth in the 4th quarter down by 2.84 percentage points, after having added to growth in each prior quarter growth beginning in the 2nd quarter of 2003.
Consumer prices, as measured by the personal consumption expenditure (PCE) price index, fell at a 5.5% annualized rate in the 4th quarter, after rising 5.0% in the 3rd quarter.
Excluding volatile food and energy, prices rose 0.6% in the 4th quarter, after a 2.4% increase in the 3rd quarter.
Highlights of today’s GDP report:
The decline in real GDP in the 4th quarter primarily reflected a decline in exports (down 19.7%—the first decline since the 2nd quarter of 2003—vs. a 3% increase in the 3rd quarter), declining consumer spending (down 3.5% vs. a decline of 3.8% in the 3rd quarter), declining residential investment (down 23.6% vs. a 16.0% decline in the 3rd quarter), and declining equipment and software spending (down 27.8% vs. a 7.5% decline in the 3rd quarter).
Those declines were partly offset by positive contributions from inventory investment (the real change in inventories added 1.32 percentage points to the 4th quarter change in real GDP after adding 0.84 percentage point to the 3rd quarter change) and federal government spending (up 5.8% vs. a 13.8% increase in the 3rd quarter). Imports, which are a subtraction in the calculation of GDP, declined at a 15.7% annualized rate (vs. a decline of 3.5% in the 3rd quarter).
The acceleration of the decline in GDP relative to the 3rd quarter mostly reflected a downturn in exports a much larger decrease in equipment and software.
Residential investment has declined for 12 consecutive quarters, reducing real GDP growth over that period by an average of 0.91 percentage point.
Over that same period, export growth has added to real GDP growth by an average of 0.68 percentage points.
However, exports pulled growth in the 4th quarter down by 2.84 percentage points, after having added to growth in each prior quarter growth beginning in the 2nd quarter of 2003.
Consumer prices, as measured by the personal consumption expenditure (PCE) price index, fell at a 5.5% annualized rate in the 4th quarter, after rising 5.0% in the 3rd quarter.
Excluding volatile food and energy, prices rose 0.6% in the 4th quarter, after a 2.4% increase in the 3rd quarter.
