Q4 GDP Slow Down Temporary or Sign of Things to Come

Holiday sales, widespread travels and the Christmas spirit couldn’t save the United States economy in the fourth quarter of last year as the gross domestic product took a dive, surprising many analysts who expected higher growth.

According to the Department of Commerce, the U.S. economy grew only 2.6 percent, missing the 3.3 percent projections. Although this beats the average of 2.4 percent over the past four years, economists wanted to see GDP growth at around three percent per quarter.

Despite the downbeat numbers, Wall Street strategists and market analysts purport that the U.S. economy is getting better because job growth reached its highest since 1999, the Federal Reserved ended its massive quantitative easing program and both business and consumer confidence are at their highest levels since the recession.

“With the collapse in energy prices increasing households’ purchasing power, we expect strong consumption growth to continue driving GDP growth in the first half of this year,” economist Paul Ashworth of Capital Economics wrote in a note to clients (via USA Today).

Gross Domestic Product

Here are some other figures from the latest economic numbers in the final quarter of 2014:

Consumer spending, which represents at least two-thirds of the U.S. economy, jumped 4.3 percent amid falling gasoline prices and stronger job growth that contributed to more dollars in the pockets of shoppers.

Business investment rose only 1.9 percent because companies were hurt by a rising U.S. dollar and lackluster overseas growth. Meanwhile, energy companies have been victimized by declining oil prices.

Exports slowed to 2.8 percent and imports climbed due to the greenback that made foreign products cheaper to purchase for American consumers. However, the widening trade gap, which hit just under half-a-trillion dollars in the last quarter, continues to hurt the country and is a major factor to economic growth.

What does the rest of the year hold for us? Economists remain flummoxed because there are double-edge swords in all sectors of the economy.

It’s predicted the U.S. economy will grow and consumers will save approximately $750 in transportation costs. With that being said, it’ll be harder to export products, companies are already warning about tumbling sales and overseas markets – Japan, China and the eurozone- are experiencing weakening economies and perhaps deflation.