Fear is spreading across the markets that the U.S. economy is losing steam as fourth quarter growth plummeted and exports deteriorated.
U.S. gross domestic product (GDP) expanded at a meager 0.7 percent, missing what were already low expectations. U.S. exports dropped 2.5 percent as markets continue to be ravaged by slowing global demand and the strength of the dollar, reports Market Watch. Inflation also had a spectacular collapse down to 0.1 percent annually from 1.3 percent in the third quarter. The Federal Reserve’s target for inflation is 2 percent.
The historic lows in oil prices contributed heavily to bogging down inflation. This is, however, good news for American consumers who spent less overall on energy costs. Consumer spending fell from 3 percent in the third quarter but beat low expectations by increasing at 2.2 percent, reports The New York Times.
“There are definitely problem areas, but consumer spending, housing and the nonenergy parts of capital spending are still fairly solid,” Nariman Behravesh, chief economist at consulting firm IHS, told The New York Times.
Business inventories, a company’s stock of goods, declined from $85.5 billion in the third quarter to only $68.6 billion, showing a tapering of consumer demand. While concerning, it was better than expected, but now economists are worried there could be larger declines in inventories in the first quarter of 2016, reports Reuters.
The overall disappointing news adds to investor frustrations over the tumultuous start in the stock market this year. Fears are mounting across the industry of potential economic calamity looming on the horizon as corporate debt rises to 12-year highs and global credit defaults mount. (RELATED: There’s A $29 Trillion Debt-Bomb That Has Some Investors Rattled)
Growth for 2015 rose at a rate of 2.4 percent, roughly the same as in 2014 and missing the elusive 3 percent annual growth rate that marks a healthy economy. The U.S. has not had an annual growth rate above 3 percent since 2005.
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