WASHINGTON – The nation’s economy grew at an annual rate of 0.6 percent in the fourth quarter, down from 4.9 percent in the third, the U.S. Department of Commerce’s Bureau of Economic Analysis said today. The estimated increase in the real gross domestic product – the nation’s output of goods and services, adjusted for inflation – was unchanged from the BEA’s sketchier “advance” report last month.
Analysts had expected the BEA to revise its estimate upward to 0.8 percent as more complete data became available, according to the median estimate from a Bloomberg News survey of 74 economists.
But the BEA said that, although changes were seen in some GDP components, those revisions offset one another. “Inventory investment declined more than in the advance estimate,” the bureau said in a statement, while U.S. imports decreased, rather than increasing as previously thought.
The price index for gross domestic purchases rose at a revised annual rate of 3.9 percent in the fourth quarter, up from the previous estimate of 3.8 percent, accelerating from the previous quarter’s 1.8-percent rise. Energy prices turned up in the period while food costs slowed.
The core price index excluding food and energy increased at an annual rate of 2.5 percent in the fourth quarter after rising at a 1.9-percent in the third quarter.
Real disposable personal income fell a revised 0.3 percent annual rate in the fourth quarter, a downward revision of 0.6 percentage points, after rising at a revised 4.0-percent annual rate in the third quarter.
For all of 2007, the real GDP expanded 2.2 percent to $11.6 trillion, in the smallest gain of the last five years, after rising 2.9 percent in 2006. The price index for gross domestic purchases rose at a 2.7-percent clip in 2007, after rising 3.3 percent the year before. Both figures were unchanged from the BEA’s advance report. (READ MORE)
“This puts us uncomfortably close to a recession,” John Lonski, chief economist at Moody’s Investors Service, told Bloomberg Radio in New York.
Additional information, including the full preliminary Gross Domestic Product report, is available from the U.S. Department of Commerce’s Bureau of Economic Analysis at www.bea.gov.
