Watch Out Below for Falling GDP

John Ransom | February 27, 2015 11:37 AM

The revised estimate for GDP growth in the fourth quarter came out before the market open today. Almost a half a percentage point was shaved off of the original estimate of 2.6% annual growth, down to 2.2%. Lower spending on residential construction was offset partly by higher government spending.

The revision was in line with what analyst expected. Coming off big gains in the third quarter, analyst originally expected GDP to come in around 3%. That means economists were off by about a third in their original predictions. As the Federal Reserve has indicated an eventual return to higher interest rates, GDP growth will be more closely watched for: 1) market valuations and 2) interest rate hikes.This economy is slowing.

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