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

Posted Feb 28th 2008 10:50AM by Joseph Lazzaro
Filed under: Economic Data, Federal Reserve

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%.

Tags: 2007, exports, GDP, inthenews, investment, monetary policy, Q4, Q4 2007, U.S. economy, U.S. Federal Reserve, U.s.FederalReserve

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Reader Comments (Page 1 of 1)

2-28-2008 @ 1:08PM

Americas Watchdog said...

Great Blog Joe;

We have the National Mortgage Complaint Center & the Corporate Whistle Blower Center & we are astonished that Wall Street is "surprised" by slow economic growth?

For the last five years the economy has been fueled by over inflating the real estate market, by refinances based on equity that did not exist, and by a Fed & Congress asleep at the switch when it came to regulating banks, mortgage bankers and home builders....................and now Wall Street is surprised we have a slow down?

One of the things we do is audit mortgage backed security portfolios, and if you want something to keep you up all night scared to death, start looking at what Wall Street sold pension funds or mutual funds in the form of MBS's.

We have watched the Dow all week wondering if anyone is thinking six to ten months out? We have a lot more than an economic slow down to be concerned about. It might be a real good time to check your back yard for a good potential hole for your valuables. Uncle Ben will not fix what is coming with rate decreases. In fact by doing so he is simply making the problem much worse.

Aside from worrying about how many BK pension funds we now have we are also more than a little worried about how many small to medium sized banks will survive the storm that is coming.

Start thinking of the S & L Disaster on steroids.