Economic Watch: GDP Growth Slows, Consumers Still Optimistic
Overall U.S. economic activity eased back on the gas considerably in the final quarter of last year while it expanded in 2015 at the same pace as the year before.


Overall U.S. economic activity eased back on the gas considerably in the final quarter of last year while it expanded in 2015 at the same pace as the year before.
The nation’s gross domestic product, which measures the total output of goods and services, increased at an annual rate of 0.7% in the October through December period, according to the first of three estimates from the U.S. Commerce Department. This is down from a 2% pace in the third quarter and 3.9% in the second quarter of 2015.
Consumer spending growth slowed to 2.2% in the fourth quarter from 3% in the third quarter, likely due to warmer than normal weather that reduced demand for winter apparel and utilities.
In contrast, residential investment, which includes homebuilding and sales, remained strong, increasing by 8.2% for a second consecutive quarter, but an offsetting contraction in non-residential investment left overall investment little changed.
For 2015, the GDP increased 2.4%, the same rate as in 2014. It primarily reflected positive contributions from personal consumption expenditures, nonresidential fixed investment, residential fixed investment, private inventory investment, state and local government spending, and exports, according to the department. Imports, which are a subtraction in the calculation of GDP, increased.
“A weaker-than-expected year-end growth report, undermining expectations of momentum driving the U.S. economy above and beyond the current range of circa 2% to 2.5% growth,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “Consumers remain restrained amid longstanding modest growth in wages, and businesses, facing the perfect storm of a heightened inventory overhang, rising U.S. dollar, and tepid global demand, remain hesitant to invest, sitting on the sidelines.”
Going forward, she said, the Federal Reserve remains convinced that continued moderate growth will be sufficient to spark further gains in topline activity, employment and inflation but so far there has been only moderate growth.
“Without meaningful improvement in investment near-term, the U.S. economy will struggle to maintain the current trend pace, let alone gain momentum beyond 2% to 2.5%,” Piegza said.
But in contrast, there is reason to be optimistic about a rebound later this year, according to Josh Nye, economist at RBC Economics.
“The slowing in the fourth-quarter 2015 consumer spending growth followed a string of strong increases in recent quarters. Robust job gains alongside a further decline in energy prices should prompt a return to that solid trend in 2016,” he said. “The decline in business investment reflected both a retracement of strong equipment investment in the prior quarter and a further decline in non-residential structures. The latter is partially due to weaker energy sector investment, and while low oil prices will prompt further declines, the energy component’s shrinking share of investment points to less of a drag on overall spending going forward,”
RBC’s forecast assumes that stronger consumer spending, continued strength in residential investment, and a rebound in business investment will help domestic demand growth rebound to around 3% early this year.
“We expect the drag on growth from net trade to persist, however, given solid domestic spending, weak external growth, and further strengthening in the U.S. dollar. That should limit the rebound in GDP growth to 2.5% in the first quarter of 2016,” Nye said.
Consumers Still Upbeat Despite Shocks
In the meantime, the expectation of stronger consumer spending that Nye described may indeed be at least tough to knock down, according to a separate report showing consumer confidence is still strong with 2016 financial markets starting off on a rough note and an epic blizzard last weekend.
The University of Michigan Survey of Consumers shows its measure of consumer sentiment this month was just below last month’s level. Its gauge of expectations is unchanged and consumers’ assessment of current economic conditions fell slightly
“The small downward revisions were due to stock market declines that were reflected in the erosion of household wealth, as well as weakened prospects for the national economy,” said Surveys of Consumers chief economist, Richard Curtin. “The interviews conducted from last Friday until early this week provide no evidence that the East Coast blizzard influenced the data.”
He noted the overall level of confidence is below last January's peak, but so far, the decline amounts to just 6.2%, indicating slower growth, not a recession in 2016.
More Fleet Management

How Innovative Trucking Leaders Turn Change Into an Advantage
As the pace of change accelerates in trucking, the fleets that adapt best have more than the latest technology. They have cultures that embrace improvement.
Read More →
Freight Broker Bonds Just Got Harder to Get. Here's What That Means for Your Fleet.
When it gets harder for a freight broker to prove they are financially sound, the ones who cannot clear that bar get pushed out of the market. And those are exactly the brokers who used to leave motor carriers holding the bag.
Read More →
Long-Awaited Canadian Border Bridge to Open in Detroit
For trucking, the bridge opening should offer immediate improvements in efficiency and reliability, with new customs facilities, expanded inspection capacity, and direct freeway-to-freeway connections.
Read More →
Aurora Rolls Out Next Generation of Driverless Trucks for Commercial Freight
Aurora's latest autonomous trucks it's rolling out with International feature lower-cost hardware designed for a million miles as the company expands commercial driverless freight operations across the U.S. Sun Belt.
Read More →
Freight Tonnage Down, Rates up, as Lower Capacity Powers Trucking Recovery
The recovery from the freight recession continues to be driven by reduction in capacity rather than by increased demand.
Read More →
Think Your Trucking Fleet Isn't Using Much AI? Think Again
Shadow AI — the use of unauthorized artificial intelligence tools at work — is becoming increasingly common, putting sensitive company data at risk. Learn how trucking fleets can protect sensitive data while embracing AI.
Read More →
ArcBest Consolidates Brands, Cuts Workforce
The company will bring three business units under the ArcBest brand, eliminate about 2% of positions, and expects the changes to generate $40 million in annual savings.
Read More →
Trucking Fleets Faced Record Operating Costs During Third Year of Freight Recession
ATRI's annual operational cost report shows carriers trimmed fleets, delayed equipment purchases, and ran older trucks as expenses continued to outpace freight rates.
Read More →
Michelin Adds AI Assistant to MyConnectedFleet Platform
Michelin’s new generative AI tool delivers instant fleet insights, helping managers analyze fuel use, tire maintenance, vehicle status, and operational performance without manually creating reports.
Read More →
LytxOne Platform Now Features AI, Compliance, and Asset Tracking Tools
New enhancements add AI-powered insights, asset tracking, compliance automation, and configurable privacy controls to Lytx's all-in-one fleet management platform.
Read More →
