Slower GDP growth reflects global forces
The first estimate of U.S. Gross Domestic Product (GDP) for Q4 2015 and the full-year of 2015 will be reported by the U.S. Commerce Department on Friday.
The consensus among economists, as reported by Bloomberg, is for 0.9 percent annualized growth in Q4 2015, down from 2.0 percent growth in Q3 2015.
The recent slowdown in U.S. growth results in part from the slowdown in global growth: Europe’s sluggish recovery; China’s search for a ‘soft landing’ as it slows from double-digit annual growth in recent decades; and setbacks in many emerging-market economies, including especially those heavily dependent on oil sales. A global oil glut has driven crude prices down sharply; disparities in monetary policy between major central banks, meanwhile, have helped drive the U.S. dollar higher. All of this makes goods produced for export in U.S. factories, and oil pumped from U.S. oil fields across the Midwest, less price-competitive globally.
As a result, said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, “Manufacturing activity has slowed down. We’re seeing inventory de-stocking—manufacturers aren’t replacing what they’re selling, they’re just selling things they’ve already accumulated.”
In spite of recent sub-par growth, though, key players in the U.S. economy — consumers, employers and job-seekers — are doing quite well, said Jim O’Sullivan at High-Frequency Economics. He cited the following: “Consumer confidence numbers moving up, employment numbers pretty strong, including a really booming December number, and the boost to consumer spending power from lower gasoline prices.”