From the fourth quarter of 2014 to the third quarter of 2015, personal consumption expenditures contributed 213 basis points of US GDP growth of 215 basis points.Īs we projected, the wealth effect associated with tumbling energy prices helped to stimulate record gasoline demand last summer and a sharp increase in the US Dept of Transportation’s estimate of miles driven on federal highways. However, our call for strong consumer spending to drive the US economy panned out.
Although the Bureau of Economic Analysis won’t release the official data until the end of this month, the US economy probably expanded by 2.4 percent to 2.5 percent last year. This projection will likely prove overly optimistic. Our analysis highlighted external factors-especially in China and other emerging markets as the biggest downside risk-to US economic growth. In Outlook 2015: Pain and Gains, we called for US gross domestic product (GDP) to grow by about 3 percent, with robust consumer spending offsetting economic weakness elsewhere. FREE PREVIEW Subscribe to Read the Full Article
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