GDP Growth in 4Q 2007 Slows to 0.6%

News on Wednesday that the Fed would again cut rates, this time 0.5 percentage points to 3.0%, was preceded by news that the gross domestic product growth was slower than expected in the fourth quarter 2007, at 0.6%. The number is based on advance estimates and will be updated Feb. 28, 2008, using more complete data.
 
Real gross domestic product is the output of goods and services produced by labor and property
located in the U.S. In the third quarter, real GDP increased 4.9%.
 
The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential structures, state and local government spending, exports, and equipment and software that were largely offset by negative contributions from private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased slightly.
 
The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn in inventory investment and decelerations in exports, in PCE, and in federal government spending that were partly offset by a deceleration in imports and an acceleration in state and local government spending.