Economic growth slowed to a 0.7 percent growth rate to end 2015, the Department of Commerce reported Friday morning, a decline even worse than expected.
Private sector economists had expected inflation-adjusted GDP growth to slow from 2 percent in the third quarter to 0.9 percent in the fourth quarter, according to a poll conducted by Bloomberg.
The slowdown was attributable to slower consumer spending and business investment, and falling exports. Those factors were partly offset by faster federal government spending and a slowdown in imports, which are counted against GDP.
With Friday’s report, total real GDP growth for 2015 was 2.4 percent, the same as for 2014.
The fourth-quarter report appeared to clearly reflect the ongoing pressures on the U.S. economy from slowing growth overseas, which has decimated the price of oil and driven up the dollar.
Business spending on buildings was down more than 5 percent, while investment in machines was down 2.5 percent in the quarter, as would be expected given the continuing fallout from low oil prices among energy producers and the stronger dollar on manufacturers, whose products have become more expenseive to export.
Meanwhile, low oil prices throughout the year helped push consumption spending growth to 3.1 percent, the fastest growth in a decade.
The weak finish to the year is one of several factors that have risen economists’ assessment of the risk of recession in recent weeks and months. Stock market turbulence has also fueled fears of another downturn.
Those worries come just a month after the Federal Reserve raised interest rates from zero for the first time since 2008, a step taken in the expectation that the economy was going to continue improving, putting the Fed at risk of keeping money too loose and stoking inflation or financial excess.
For its part, the Fed has given little indication that it sees the economy faltering this year. After meeting to discuss monetary policy this week, Janet Yellen and other Fed officials issued a statement that they were “closely monitoring” global developments, but indicated that they still expect the effects of cheap oil and the stronger dollar to be only temporary. The central bank sees GDP growth at 2.4 percent in 2016, the same as 2015.
Part of the cause for optimism has been that job growth has remained strong, averaging over 280,000 for each of the past three months.
Jim O’Sullivan, an economic forecaster for High Frequency Economics, wrote in a note on Friday’s numbers that weak foruth quarter GDP numbers have been the norm in recent years, “and each time employment growth remained strong and the weakening in GDP growth was not sustained. This time could be different, of course, but that has yet to be determined.”
GOP Ways and Means Committee chairman Kevin Brady, however, blamed the Obama administration for growth slower than it could be.
“0.7 percent growth is not good enough and Washington should not pretend that it is,” the Texas lawmaker said in a statement. “If our economy continues at this anemic pace, millions of Americans will remain out of work and even more people will not see the raises they have worked hard to earn.”
The GDP numbers are seasonally-adjusted to smooth out predictable fluctuations. Friday’s release is the first of three estimates of GDP. The second estimate will be released Feb. 26.
