The US economy grew at an annualised rate of 0.7% in the fourth quarter of 2015 compared with the same quarter a year ago, official figures show. The rate of growth marks a sharp slowdown from the 2% growth recorded in the previous quarter.
The US Commerce department said one reason for the slower growth was a slowdown in consumer spending. Export growth was also slower as the strong dollar made US goods more expensive outside the country. Energy sector investment continued to plummet, with spending on mining exploration, wells and shafts down 38.7%, a slightly less dramatic fall than the 47% drop seen in the third quarter. Overall, investment in the sector was down 35% in 2015, the largest drop since 1986.
Unseasonably mild weather held back some consumer spending, with another brake on growth from manufacturers who needed to run down surplus stock rather than make new goods.
Both factors are seen as temporary. Overall, the US economy grew by 2.4% in 2015, and is expected to pick up steam to give a similar growth figure this year. On Wednesday, the US central bank the Federal Reserve said that growth had “slowed late last year” but that employment had picked up. At the end of last year the Fed was sufficiently confident in the strength of the US economy to raise rates for the first time since 2006.
Chris Williamson, chief economist at Markit, said the drop in growth of consumer spending would sustain fears that the US economy was “reaping few benefits from the oil price rout while paying the cost as oil sector revenues plunge”. He said the figures could put off the timing of the next rise in US rates: “The slowdown adds more pressure to the Fed to reconsider the timing of future rate hikes, and suggests that policymakers may pare back their current expectations of a further four quarter-point hikes in 2016.” (BBC News, 2016)