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By Jennifer Yousfi
The U.S. economy only grew 0.6% in the fourth quarter of 2007.
"The credit crunch and rising inflation teamed to put the economy flat on its back in the final three months of 2007," IDEAglobal economist Joseph Brusuelas.
The U.S. Bureau of Economic Analysis released its final estimate of Gross Domestic Product (GDP) for the three-month period spanning October to December yesterday (Thursday). The final estimate, an increase of 0.6%, was unrevised from the preliminary estimate released last month.
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"The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn in inventory investment and decelerations in exports, in federal government spending, and in [personal consumption expenditures] that were partly offset by a downturn in imports," the BEA said in its statement.
The final estimate is a marked decrease from the 4.9% increase in GDP for the final estimate of third quarter 2007.
"It's hard to see any good news at all,'' Nariman Behravesh, chief economist at Global Insight Inc., a Lexington, Mass. forecasting firm, told Bloomberg News. "Housing is still dropping like a stone and now the consumer is slowing too. That's the big difference" from the third quarter.
The advance estimate for first-quarter 2008 GDP growth is slated for release on April 30, and economists are estimating a flat reading.
"The fate for 2008, I think, was set some time ago,'' Don Drummond, chief economist at Toronto-Dominion Bank in Toronto, said in a Bloomberg Radio interview. "Growth is going to average 0.0. It's flat. Maybe it's going to be a tiny negative or maybe it's going to be a tiny positive."
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