Covering the Economy: BEA January 27 GDP Release: Reuters Immediate Wire
Covering the Economy: BEA January 27 GDP Report

Covering the Economy: BEA January 27 GDP Report: Kash Mansouri Instant Reaction

He writes, at Angry Bear:

Angry Bear : Dramatic Slowdown in GDP Growth: The BEA has just released its first estimate of economic growth for the fourth quarter of 2005. It was dramatically lower than most people were predicting. The consensus estimate was for about 3.5% growth. Some pessimists guessed that it would be as low as 2.5%. The actual figured turned out to be just 1.1%.... This is a terrible report. Consumer spending slowed dramatically, to its lowest rate of growth in recent history. Business spending slowed even more dramatically, from a growth rate in the neighborhood of 8-10% over the past 10 quarters to just 3% this quarter - the lowest rate of business spending growth since 2003:Q1. In fact, the only thing that kept GDP growth positive at all was a massive build-up in inventories - the largest increase in inventories since early 2002. Apparently businesses were caught off guard by the slowdown in demand, and have not yet slowed their production accordingly. Presumably, they will.

All in all, this is an extremely worrying report. I've been bearish about economic growth in 2006 for a little while now, and this has just confirmed my worst fears. Kash