Q4 2015 GDP Growth Revised Upward To 1.4%

Date: March 28, 2016

Household Spending On Services Prompted Growth, Commerce Department Says

The latest Commerce Department data indicated that Q4 2015 GDP actually grew at a rate of 1.4%, a revision from previous estimates of a 1% growth rate. According to Bloomberg News the upward revision came after Q4 GDP growth was “supported by stronger household spending on services.” Bloomberg said the tweaked numbers “also showed that corporate profits dropped in 2015 by the most in seven years,” 7.8%, which “illustrates the limits of an economy struggling to gather steam at the start of this year.” The AP reported that although the latest projection exceeded the Commerce Department’s forecast a month ago, it’s “still below” the 2% annualized growth in the third quarter. The AP said the economy’s “new-found strength” was largely derived from “consumer spending on services such as recreation, which helped offset a manufacturing slump caused in part by a global economic slowdown.” The story added that although “profit declines of [the] magnitude” cited in Friday’s data “can raise concerns about a possible recession,” IHS Global Insight economist Nariman Behravesh “said they were heavily influenced by the weakness in the energy sector.” Bloomberg News also highlighted “concern” over corporate profits, whose fourth-quarter drop of 11.5% was the steepest since a 31% year-on-year collapse at the end of 2008 “during the height of the financial crisis.”

What This Means For Small Businesses

Small businesses are no stranger to the uncertainty of an anemic economy, and this latest slight revision of GDP data is unlikely to be enough to shake the downcast mood of many small business owners. When commenting on the results of the latest Small Business Economic Report, NFIB Chief Economist Bill Dunkelberg explained that current Fed economic policy coupled with an uncertain outcome in November’s presidential election are among the key reasons that “expectations for future business conditions remained very negative.”

Additional Reading

Reuters and the Wall Street Journal also covered the revised Q4 2015 GDP report.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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