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El Espectador, Colombia

Highlighting the US GDP

By Andrés Duarte

Translated By Norma L. Colyer

3 February 2013

Edited by Rachel Smith

Colombia - El Espectador - Original Article (Spanish)

The fourth-quarter growth for the U.S. economy was -0.1 percent. This is the preliminary figure. The final data will surely change up, as happened with the data for the third quarter.

According to current data, the 2012 GDP would be 1.2 percent, indicating weak growth. Calm reigns due to increased business sales and the conviction that the economy will recover. This is important because recovery would provide a road map for the rest of the world, especially for economies that are currently experiencing problems.

The quarter’s poor performance can be attributed to a slowdown in inventory investment, and especially to lower government spending. State purchases fell 6.6 percent, annualized. Why stop to focus on this now when the country’s stock market indexes have finally reached their highest level since 2007 and the markets, especially including emergent ones, are behaving favorably?

The reason is that while on the subject of the U.S. “fiscal cliff,” an agreement was reached regarding the tax component, but the issue of the debt ceiling and cutting the budget still needs to be resolved. If the weak fourth quarter GDP can be explained by cuts in government spending, we need to be alert to what ultimately happens with the budget, as the current requirement is to take a giant cut from defense and federal spending, and we now know that this could reduce U.S. growth significantly.



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