Healthy Consumption Growth Keeps US GDP Positive In Fourth Quarter – Analysis
The US economy grew 0.7 percent in the 4th quarter, bringing its rate for
the full year (4th quarter to 4th quarter) to 1.8 percent. That is a
substantial slowing from the 2.5 percent rates of the prior two years.
By far the major component boosting growth was consumption, which grew at a
2.2 percent annual rate, driven largely by continued strong growth in durable
goods consumption, which grew at a 4.3 percent annual rate. Consumption of
services grew at 2.0 percent annual rate and non-durables grew at just a 1.5
percent rate.
Housing was also a big contributor to growth, expanding at an 8.1 percent
annual rate and adding 0.27 percentage points to growth. Housing growth has
averaged 8.5 percent over the last seven quarters. While this component is
likely to continue to grow in 2016, the pace will probably be somewhat slower.
Investment and trade were both big negatives in the quarter. The trade
deficit, measured in constant dollars, increased by $20.4 billion in the
quarter, subtracting 0.47 percentage points from growth. The trade deficit is
likely to continue to grow in 2016 as the dollar has risen further and we
probably have still not felt the full effects of the prior increase.
Spending on equipment and non-residential structures both fell in the quarter,
subtracting 0.3 percentage points from growth. Equipment spending has been hard
hit both due to the impact of the trade deficit on manufacturing and also due
to the collapse of investment in energy related sectors. There has been some
overbuilding in office buildings and retail space which could be a drag on
non-residential construction in 2016.
Another factor depressing growth in the quarter was the slowing of
inventory investment, which subtracted 0.45 percentage points from growth. The
growth in final demand in the fourth quarter was 1.2 percent.
The government sector added modestly to growth, with a 2.7 percent increase
in federal spending slightly offsetting a 0.6 percent fall in state and local
spending. Both figures are slightly anomalous (federal spending is growing more
slowly and state and local spending is growing), but the net impact on growth
of 0.12 percentage points is roughly what we can expect in future quarters.
Health care spending continues to be very much under control. Spending on
health care services, which accounts for the overwhelming majority of total
health care spending, rose at a 5.2 percent nominal rate in the fourth quarter.
This brings the increase over the last year to 4.8 percent.
Change in Personal Health Care Expenditures, 2000 to 2015 Year-Over-Year
Percent Change
Change in Personal Health Care Expenditures, 2000 to 2015 Year-Over-Year
Percent Change
Inflation continues to be nowhere in sight. The core PCE grew at just a 1.2
percent annual rate in the quarter, bringing the increase for the year to 1.4
percent, well below the Fed’s 2.0 percent target.
Non-farm business value-added grew at just a 0.1 percent annual rate. Positive In Fourth Quarter Given
the strong growth in employment over the last three months of 2015, this
implies that productivity growth will be negative for the quarter and barely
positive for the year as a whole
One of the striking aspects of the recovery had been the sharp and
completely unpredicted collapse of productivity growth. This has been a
positive in that employment growth would have been near zero if productivity
growth had remained in a range of 1.5–2.0 percent over the last five years. On
the other hand, if productivity growth remains stuck at the slow pace of the
last five years, it will impose a serious limit on the ability to raise living
standards.
A possible explanation is that the weak labor market itself is acting as a
drag on productivity as workers are forced to take low-paying, low-productivity
jobs. We will only know if this is true if the labor market tightens enough to
give workers more bargaining power and the ability to move to higher paying
jobs.
The overall picture of the economy going into 2016 is one of weak growth,
albeit with little risk of recession. Consumption growth is likely to remain
moderate, especially if energy prices stay low. Investment is likely to be a
small negative in 2016 as is trade. However, residential construction and
government spending will both be modest positives. The biggest risk is that a
set of bad events elsewhere in the world could cause the trade deficit to
deteriorate further.
TOPICS:EconomicsEmploymentUnited States
Amber Rose Praises Bestie Blac Chyna’s Rob Kardashian Romance: She Cooks
Him 'Healthy Meals'
Blac Chyna and Amber Rose Credit: Johnny Louis/FilmMagic
Amber Rose approves! The former model gushed over her best friend Blac
Chyna's new relationship with Rob Kardashian during the podcast Allegedly on
Wednesday, January 27.
"Man, I think if people are happy then that's what's most important,
period," Rose, 32, told cohosts Theo Von and Matthew Cole Weissof about
the budding romance.
"Rob is the coolest guy you'll ever meet in your life. He's realistic,
he's an amazing person and it's sad that people don't get to see that. He's
just down to earth and cool. He gets life, he gets it," she continued.
"They're working out. Chyna's cooking healthy meals for him. It's a
really, really good vibe." (Chyna's trainer, Chris Jinna, is helping
Kardashian get back into shape.)
PHOTOS: Celebrity Feuds: The Biggest Ever!
Us Weekly confirmed on Monday, January 25, that Chyna and Rob are seeing
each other. A source revealed that Rob's family is "in a bind" over
the relationship. Chyna, of course, is the ex-girlfriend of Tyga, who is
currently dating Kylie Jenner. Chyna is also a former friend of Kim Kardashian.
Blac Chyna and Rob KardashianBlac Chyna and Rob Kardashian in Calabasas,
California on January 28, 2016. VM/Rocstar/FAMEFLYNET PICTURES
Rose, meanwhile, also has connections with the Kardashian-Jenner clan. The
star — who previously dated Kanye West from 2008 to 2010 — famously slammed
Tyga last year for leaving Chyna for Jenner. West, for his part, has taken jabs
at Rose in his music and once said that he needed to take 30 showers after they
split.
"I mean records will show, I don't start sh-t, I finish it. That's
it," Rose said on the podcast when asked about the Kardashians stirring
the pot. "I don't start sh-t with nobody. Leave me the f-ck alone and I
won't have to finish it. That's it. It's very simple."
PHOTOS: Celebs Fight Back on Twitter!
As previously reported, Amber sat down with Allegedly on the same day that
her ex-husband, Wiz Khalifa, and West went head-to-head via Twitter. (West
thought Khalifa had disrespected Kardashian at the time.) West brought up
"stripper" Positive In Fourth Quarter Rose and said that he owned "their child."
That's when Rose stepped in.
Kanye West and Wiz KhalifaKanye West and Wiz Khalifa Dominique
Charriau/WireImage.com; Alberto E. Rodriguez/Getty Images
"Awww @kanyewest are u mad I'm not around to play in ur a—hole
anymore? #FingersInTheBootyAssBitch," she tweeted on Wednesday. "Lol
@kanyewest Now u wanna delete ur tweets cuz Muva has arrived?"
Rose may have a beef with the reality TV family, but she's had friendly
encounters with Kourtney Kardashian's ex.
"I met Scott [Disick] three times. He's a really cool guy. I met him
through mutual friends," she told Allegedly.
When asked if they're dating, she replied: "Oh my God. That is so not
true … I don't know him that well."
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