- Nariman Behravesh, chief economist at IHS
The world's number one economy slowed sharply in the fourth quarter, stoking concerns about its momentum in 2016. The US gross domestic product increased at an annualized 0.7%, according to the Commerce Department, as lower oil prices continued to hurt investment by energy companies and unseasonably mild weather dent consumer spending on utilities and apparel. The US growth pace followed a 2% rate in the third quarter. Overall, the US economy grew 2.4% in 2015 after a similar growth pace in 2014. The weak growth could stoke new concerns about the nation's ability to withstand a series of major headwinds, including a slowdown in China and a stronger US Dollar that has cut profits for American manufacturers. Nevertheless, the GDP figure for the fourth quarter is only a preliminary gauge and will be a subject to revision over the next two months.
In the final three months of 2015, businesses accumulated $68.6 billion worth of inventory, down from $85.5 billion in the September quarter. The small inventory build subtracted 0.45 percentage point from the first estimate of fourth-quarter GDP growth. The US Dollar, which has appreciated 11% versus its counterparts since last January, remained a drag on exports, resulting in a trade gap that subtracted 0.47 percentage point from GDP growth in the reported period.
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