US Economy Contracts .1% in 4th Qtr – Not Good for Real Estate | Bedford Hills Real Estate

US ECONOMY SHRINKS: GDP FALLS 0.1% IN Q4

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Pete Souza/Official White House photo

The advance estimate for fourth-quarter U.S. GDP is out.

The economy contracted 0.1 percent in Q4 versus economists’ consensus expectations of a 1.1 percent expansion.

Personal consumption growth came in at 2.2 percent – slightly higher than consensus estimates of 2.1 percent – but was driven largely by a 13.9 percent advance in the consumption of durable goods.

Government spending was the largest driver of the economic contraction in the fourth quarter, subtracting 1.33 percentage points from Q4 GDP growth and falling 6.6 percent. Federal spending fell 15.0 percent, led by a 22.2 percent drop in defense spending. Federal spending on nondefense items was actually up 1.4 percent. State and local spending fell 0.7 percent.

The drawdown in private inventories was the second culprit behind the contraction, subtracting 1.27 percentage points from Q4 GDP growth after adding 0.73 percentage points to Q3 GDP growth.

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