Final 2007 Q4 GDP Remains Unchanged at .6%

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The BEA reported that the final U.S. GDP growth for Q4 2007 remains unchanged from the advance and preliminary reports at .6%. The final report includes revisions based on new data coming in.

Economic growth plummeted from 4.9% in Q3, and 3.9% in Q2 2007. The total GDP for the year was 2.2%, down from the 2006 growth rate of 2.9%. The decline in growth was due to the housing market slowdown and related weak consumer spending. (Source: GDP News Release)

Coincidentally, it is the exact same number as GDP growth in Q1 2007. The last time GDP was that low was in Q1 2003, the tail-end of the last recession. A healthy growth rate is about 2-3%. For a review of the most recent GDP reports, see GDP Current Statistics.

A decline in Q4 GDP was expected by most economists, including Federal Reserve Chairman Ben Bernanke. (See National and Regional Overview, Charlotte, NC, 11/29/07)

What It Means to You

Unlike Q3, exports were not helped by the dollar's decline, which helps exports (by making them relatively cheaper and more competitive) and hurts imports (by making them more expensive). That's because higher prices of imports like oil more than offset the higher exports in dollar amounts.

The greatest concern now is whether GDP will worsen or turn negative in Q1 2008. If so, a recession could ensue if Q2 GDP also turns negative. The only positive in the poor GDP report is that it made policy-makers address the slow economy with the Economic Stimulus Package.

To find out how to weather a possible recession, see How Would a Recession Affect Me?

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