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US Economy Showed GDP Growth of 1.4% in 4Q15

Sarah Sands

What Were the Key Weekly Economic Indicators for Investors?

(Continued from Prior Part)

US economy grew 1.4% in 4Q15

According to the BEA (U.S. Bureau of Economic Analysis), the US economy (QQQ) (VOO) grew 1.4% in 4Q15—compared to 2% in the previous quarter. It was above the U.S. Department of Commerce’s estimation of 1%. Despite weakness in the overseas demand, the economic growth was supported by stronger household spending.

A report prepared by the BEA indicates that corporate profits dropped in 2015. From 2010 to 2015, the corporate profits declined slowly. The drop in earnings are met by lower commodity prices, sluggish foreign markets, and cutting back on new investment. The stronger US dollar (UUP) and slowing productivity growth pressures businesses. However, lower inflation encourages households to keep spending.

On the expenditure side, personal consumptions account for 68% of the total GDP (gross domestic product). In this 68%, the expenditure in goods accounts for 23% and services accounts for 45%. In the fourth quarter GDP, there was a huge improvement in the services spending mainly in transportation and recreation. Major entertainment stocks such as Walt Disney (DIS), Time Warner (TWX), and 21st Century Fox (FOXA) would be impacted postively due to the above reason. However, the SPDR S&P 500 ETF (SPY) returned -1% over a three-month period.

In the next part of this series, we’ll analyze the performance of the US new home sales index.

Continue to Next Part

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