The U.S. Bureau of Economic Analysis released its preliminary estimate of 4th quarter results and it shows that economic growth slowed considerably from last quarter’s torrid pace of 5 percent to 2.4 percent. This estimate should be viewed with caution because it is based on incomplete data and further revisions will be released in the future. Having said that, it still remains a decent figure and is more in line with what we experienced throughout the year. If this quarter’s growth were to receive a grade, it would be C+ without a curve, but an A with a curve.
What to smile about 4th quarter growth:
- Consumer spending picked up, which can be explained by low gas prices that freed up more money to spend in other areas.
- Business spending also grew, particular in intellectual property and residential.
What to frown about 4th quarter growth:
- A weakening global economy and resurgent U.S. economy drove down net exports.
- Federal government spending contracted by the largest margin of the year.
- The pace of equipment spending dropped and overall growth in fixed investment and structures grew at a slower rate.
Overall, we should still be encouraged by these numbers.