Despite a sluggish fourth quarter, the U.S. economy expanded last year. The 2.4% rise in gross domestic product kept pace with 2014’s annual growth, while exceeding the 2.2% average annual expansion experienced during the recovery from the Great Recession.
While the economy’s year-long showing for 2015 was solid, fourth-quarter results were weak. GDP expanded at a seasonally adjusted annual rate of just 0.7% during the last three months of the year, according to the U.S. Department of Commerce.
The slowdown from 2% growth in the third quarter was caused, in part, by a feeble global economy and low oil prices. Impacted by such factors, businesses pulled back on inventory and investment, and the trade divide widened.
Nonetheless, economists do not see significant cause for concern. Strong employment numbers and greater disposable income for households are a few important signs that suggest the fourth quarter was a stumble rather than the start of a fall.
It’s a “temporary blip,” said Paul Ashworth of Capital Economics of the fourth-quarter performance, as reported by USA Today. “We do not believe this is the start of a more serious downturn.”
According to the commerce department, fourth-quarter exports fell 2.5%, while imports rose 1.1%. The deepening trade deficit chopped half a percentage point off of economic growth. Meanwhile, non-residential investment dropped 1.8% and equipment outlays, a proxy for capital spending, fell 2.5%.
Still, there were notable bright spots in the fourth quarter. Residential investment soared an impressive 8.1%. And consumer spending, while down from the 3% growth rate of the third quarter, increased by 2.2%. Unusually warm weather appears to have influenced the drop in consumer outlay, reducing household spending on utilities.