The BEA published a slightly lower than expected GDP (first estimate) for Q4 2015: The growth rate was 0.7% – 0.1 pp below market expectations. In the third estimate the GDP growth rate was 2%. So the U.S. economy grew at a slower pace, which could suggest an economic slowdown.
But let’s take a closer look at the main components of the GDP growth rate: Personal consumption still rose by 2.2%, albeit it was the lowest growth rate since Q1; private domestic investment contracted by 2.5%, year on year – the last time it fell by such a rate was back in Q1 2014; exports also contracted by 2.5%, while imports rose by 1.1%. If the U.S. dollar were to keep rising, as it did throughout most of 2015, net exports are likely to further have an adverse impact on the GDP. But since net export doesn’t account for a big portion of GDP, it’s not going to put much of dent to the growth rate.
The big question is whether consumer spending is about to grow at a slower pace or not. If households keep de-leveraging and saving more, this could reflect on lower consumer spending, which could result in even slower growth rate moving forward.
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