Gross domestic product sputters in 4Q

Gross domestic product growth slowed drastically in the fourth quarter of 2007, increasing by only 0.6%. This followed a 4.7% increase in the third quarter, bringing average growth in 2007 to 2.2%, compared with 2.9% in 2006. These numbers were released today by the Bureau of Economic Analysis. The report showed across-the-board slowing of economic growth, combined with an increase in consumer prices. Inventory investment, a measure of inventory liquidation by sellers, detracted 1.8% from GDP in the fourth quarter, after adding 0.89% in the third quarter. Consumer spending weakened, adding 1.37 percentage points to growth after adding 2.01 percentage points in the third quarter. Prices of goods rose in conjunction with the decline in GDP growth, prices for personal expenditures rose by 3.9%, compared with a rise of 1.8% in the third quarter. Excluding food & energy, consumer prices increased 2.7% in the final quarter of 2007. Housing investments, battered by subprime-mortgage losses, continued to fall; subtracting 1.18 percentage points in the fourth quarter after detracting 1.08% in the third quarter.