GDP

GDP up 0.7 percent in fourth quarter of 2015

By Marianne LeVine

Gross Domestic Product grew 0.7 percent in the last quarter of 2015, the Commerce Department reported Friday, continuing a slide in the economic growth rate since July.

The 0.7 percent growth figure was lower than the third quarter’s 2 percent GDP growth, which in turn was lower than the second quarter’s 3.9 percent GDP growth. During the first quarter of 2015 GDP declined by 0.2 percent.

The declining growth rate is a potential setback for Democrats in the presidential race, who will be running in part on President Barack Obama’s economic record. But they can still point to an unemployment rate that’s been cut in half since Obama entered office.

House Ways and Means Chairman Kevin Brady (R-Tx.) said "0.7 percent growth is not good enough and Washington should not pretend that it is"

Josh Bivens, research and policy director at the left-leaning Economic Policy Institute, appeared to agree, and said "continuing economic weakness" was likely causing slow productivity growth. He recommended that the Federal Reserve refrain from making further interest rate hikes.

The Commerce Department attributed fourth quarter deceleration to a decline in personal consumption expenditures that in turn reflected weak growth in wages and salaries. The Labor Department Friday reported that compensation costs for civilian workers rose 0.6 percent for fourth quarter and 2 percent from December 2014 to December 2015.

Deceleration in exports and imports and acceleration in federal government spending also contributed to the slowdown in growth.

For the year, GDP increased 2.4 percent in 2015, the Commerce Department said, in an estimate it will recalculate twice in coming months. That’s roughly consistent with 2014’s 2.4 percent and 2013’s 2.3 percent.

A Bloomberg survey of economists predicted real GDP growth at 0.8 percent for the fourth quarter of 2015. This is the first of three GDP estimates Commerce will make for the fourth quarter.