GDP not as bad as it looks

January 30, 2015 09:06 AM

US GDP fourth quarter

The first look at Q4 growth for 2014 was a little lighter than expected by forecasters surveyed by Bloomberg. Annualized growth in the three months ending December of 2.6% compares to a forecast of 3.0%.

In terms of contribution from various inputs, consumer spending added 2.8%,  the most since March 2006. Investment spending also added 1.2% to the headline number, boosted by a build of 0.8% in private inventories.

Dragging on the heels of that 4.0% combined effort were state and local government (-0.4%) and net exports (-1.0%). And so while the headline reading might be light, it’s hard to poke a hole in the strength of the consumer effort, which would have been even healthier but for a lackluster December retail sales reading.

Chart – Growth boosted by inventories and consumer spending

About the Author

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.