Instant Analysis: Advance GDP estimate for Q4 2015

Scott Anderson
Posted by Scott Anderson
Chief Economist

The Bureau of Economic Analysis released its initial estimate on Q4 2015 GDP this morning, coming in at +0.7% SAAR.  This was just slightly below my estimate for +0.8% growth.

Large cargo ship leaving Asian part with city skyline in the distance on a sunny day with fluffy clouds in background.The composition of U.S. growth in the fourth quarter was as mixed as we thought.  We find relative strength and resilience in real consumer spending (+2.2% SAAR), residential investment (+8.1%), and government spending (+0.7%).

These gains were mostly offset by big drops in business investment: structures (-5.3%) and equipment (-2.5%); exports (-2.5%); and a large slowdown in inventory gains that subtracted $22 billion, or 0.45% from Q4 GDP alone.

In short, few surprises, but not a lot to cheer about, either.  A similar pattern will likely be visible in the Q1 2016 release as well: relative strength in consumer spending, housing, and government spending, with continuing weakness in exports and business investment.  The big difference could be inventories that are unlikely to be trimmed as aggressively this quarter.

We continue to forecast 2.3% real GDP in Q1 2016, in anticipation of some acceleration in real consumer spending and government spending.  However, it’s important to note there is probably more downside risk than upside risk to this forecast right now.  We see downside risks from real export growth that could continue to disappoint on slowing global demand, and the temporary impact of the January winter storms on the East Coast, which in past years have interrupted quarterly real GDP gains.

Real U.S. GDP growth for 2015: +2.4% year-on-year.  My forecast for 2016 real GDP growth: +2.1% year-on-year.

Reminder: All comments are moderated prior to publication and must follow our Community Guidelines.

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Change Matters site. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Change Matters site.