Today, the Bureau of Economic Analysis (BEA) released their second installment of the Q4 2007 GDP report showing a truly anemic annual growth rate of 0.6%.This stunning reversal from the exceptionally “hot” rate of growth seen in Q3 2007 was fueled primarily by accelerating declines in fixed residential investment, slowing growth to fixed non-residential investment, and a sudden deceleration in the export of goods to a much weaker 4.0% growth rate.
In fact, the deceleration to the export of goods was so severe that it seems altogether possible that the Q3 26.6% growth rate was an temporary aberration, a result of there being a brief disconnect between the slowing U.S. economy (and weak dollar) and the rest of the world economies relative strength.
Now that the world economies are slowing as well, it’s unlikely that exports will provide much of a crutch against which the weakening U.S. economy can lean.
Residential fixed investment, that is, all investment made to construct or improve new and existing residential structures including multi–family units, continued its historic fall-off registering a whopping upwardly revised decline of 25.2% since last quarter shaving 1.25% from overall GDP.
The decline to residential housing continues to be, by far, the most substantial single drag on GDP subtracting an amount significantly greater than the contributions made by all personal consumption of durable (cars, furniture, etc.) and non-durable goods (food, clothing, gasoline, fuel oil) and most personal consumption services during the quarter.
The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).
