US GDP Growth Slows to 1.9% in Q4


The US economy advanced an annualized 1.9% on quarter in Q4, below expectations of 2.2%. Exports slumped reversing the impact from the surge in soybean shipments in Q3 and consumer spending slowed while investment jumped, boosted by equipment and home building. In 2016, the GDP expanded 1.6%, the lowest since 2011.

Personal consumption expenditure (PCE) contributed 1.7 percentage points to growth (2.03 percent in the previous quarter) and rose 2.5 percent (3 percent in the previous quarter). Spending slowed for durable goods (10.9 percent from 11.6 percent) and services (1.3 percent from 2.7 percent) but recovered for nondurable goods (2.3 percent from -0.5 percent).

Fixed investment added 0.67 percentage points to growth (0.02 percentage points in the previous quarter) and increased 4.2 percent, compared to a meager 0.1 percent expansion in the previous period. Investment in equipment rebounded (3.1 percent from -4.5 percent); residential one recovered (10.2 percent from -4.1 percent) and intellectual property products rose faster (6.4 percent from 3.2 percent) while investment in structures slumped 5 percent, following a 12 percent jump in the previous period.

Private inventories added 1 percentage points to growth, higher than 0.49 percentage points in the previous period and the biggest contribution since the first quarter of 2015.  Businesses accumulated $48.7 billion worth of inventory.

Meanwhile, exports shrank 4.3 percent, reversing from a 10 percent jump in the previous quarter and imports increased at a faster 8.3 percent (+2.2 percent), bringing the impact from trade to -1.7 percent (+0.85 percent in the previous quarter). It is the biggest drag since the second quarter of 2010. 

Government spending and investment added 0.21 percentage points to growth (0.14 percent in the previous period) and rose at a faster 1.2 percent (0.8 percent).

Considering full 2016, private investment slumped for the first time since 2009 (-1.5 percent), dragged down by structures (-3.1 percent) and equipment (-2.8 percent). Consumer spending slowed (2.7 percent from 3.2 percent) as well as public spending and investment (0.9 percent from 1.8 percent). In contrast, exports increased at a slightly faster 0.4 percent (0.1 percent) and imports slowed (1.1 percent from 4.6 percent). 

BEA | Joana Taborda | joana.taborda@tradingeconomics.com
1/27/2017 2:19:17 PM