Friday, January 27, 2006
1(%) out of 4 ain't good
Fourth quarter GDP growth fell to 1.1% in the fourth quarter from 4.1% in the third. GDP from an expenditures approach consists of four items: consumption; investment; government expenditures; and net exports. Taking each one in turn with two numbers -- the contribution to growth in the fourth quarter, and in parentheses the third quarter contribution.
Categories: economics
- consumption = 0.79% (2.85%) -- certainly automobiles took a tumble, knocking 2.06% off of growth versus a 0.45% contribution in the third quarter. There isn't much else there to mention, actually, but the news isn't very good elsewhere either. Real final sales -- which is a very broad measure of purchases by all sectors of the economy, not just households -- fell 0.3%. That means inventories are up, which may lead to softening of production and employment coming up. As James Hamilton says, this is just where you don't want to see problems.
- investment = 1.95% (0.87%) ... but again most of that is inventories. Nonresidential fixed investment only rose 0.3%, and this could be the effects of the hurricanes all folded into one quarter. Yes, maybe. If I'm the Republican leadership preparing for off-year elections, I sure as hell hope so. Hamilton says the increase in probability of recession right now is just slightly higher than it was a month ago, so hope is reasonable. So too is increased uncertainty.
- net exports = -1.18% (-0.12%), almost all of which is an increase in imports. I don't need to belabor this point further, but it's just hard to see that number improving too much going forward.
- government expenditures = -0.45% (0.54%). Most of this is a slowdown in defense spending on consumption goods, which knocked two-thirds of a point off GDP growth. That seems likely to stabilize, at least.
Categories: economics
