FXstreet.com (Barcelona) - Gross Domestic Product has grown in the fourth quarter at its slowest pace since 2002, sharply below the expectations, according to the advanced estimations published by the Bureau of Economic Analysis.
From October to December, US GDP grew at a 0,6% pace, instead of the 1.2% forecasted by the analysts. This increase reflects a serious slowdown from the previous quarter which posted a 4.9% increase.
The fourth quarter's GDP reflects positive contributions from personal consumption expenditures (PCE), nonresidential structures, state and local government spending, exports, and equipment and software, although most of these contributions have been offset by negative readings on private inventory investment and residential fixed investment. Imports, which are a substraction to the GDP estimation have posted a slight increase.
Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd points out to some surprises in this report: Biggest surprise here is inventories, down $3.4B after a $30.6B Q3 gain; GDP contribution -1.3%. This is baffling given the monthly data for Oct/Nov and suggests scope for an upward revision.
Likewise, Shepherdson calls the attention on the weak increase on consumption: consumption, up only 2.0%. We expected 2.9% so this means either that Oct/Nov have been revised down sharply and/or Dec was truly awful.