US GDP – 4th Quarter 2012

January 30, 2013 in U.S.

Markets were taken aback by a shock contraction in the U.S. GDP during the fourth quarter of 2012. Gross Domestic Product (GDP) fell by 0.1% year-on-year against the consensus expectation of a growth of 1.1%.

Economists were concerned that the result represented the weakest rate of growth in the GDP since 2009, even though it was driven primarily by a huge cut-back on defence expenditure, inventory de-growth and the result of the Superstorm Sandy.

On a bright note, consumer spending rose by 2.2% and business investment bounced back within the context of slower inflation. Homebuilding grew 15.3%.

All taken, economists view the report as a matter of concern, but are encouraged that the basic fundamentals of the economy are on track to produce a pipeline of growth during 2013.


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