U.S. Q4 2007 GDP rises at 0.6% annual rate, up 2.2% for 2007


The U.S. economy expanded at an annual rate of 0.6% in Q4 2007, below the consensus estimate, as activity in construction and consumer spending declined, The U.S. Commerce Department announced Thursday, in a statement.

Economists surveyed by Bloomberg News had expected the economy to grow at a 0.7% annualized rate in Q4 2007. The economy grew at a 4.9% pace in Q3 2007, the Commerce Department said.

For 2007, the economy grew at its weakest pace in five years, with GDP increasing at an inflation-adjusted 2.2%. GDP increased 2.9% in 2006. In 2007 the nation's GDP totaled $13.84 trillion, not adjusted for inflation.

In Q4 2007, a stronger performance in trade offset sub-par performances in consumer spending, business investment, residential investment, and inventories.


Economist Steve Affinito called the Q4 2007 GDP report "an in-line report, but one that shows that economic growth has slowed."

"There were few surprises in the report, but it clearly shows economic sluggishness throughout. Take away the increase in exports, and we'd really have had a poor Q4 report," Affinito said. "Also, keep in mind that Q4 traditionally is a strong quarter for the U.S. economy, so racking up 0.6% annualized growth is nothing to write home about. It's now abundantly clear that the economy has been arcing downward for at least two quarters. The task at hand now, for the Fed and Congress, is to limit the recession, and get the economy moving again."

Affinito said he expects the Q4 2007 GDP report to have little impact on the Fed when it meets next month to evaluate monetary policy, and he continues to expect the Fed to cut key, short-term interest rates again, including a 50-basis-point cut in the fed funds rate, to 2.50%.

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