Friday's data release from the Bureau of Economic Analysis shows US GDP growth slowing from a 3.5 percent annual rate in the third quarter to just 1.9 percent in Q4. One factor behind the slowdown deserves a closer look - the declining contribution of net exports to GDP growth. (The usual caveat applies to all the numbers reported in this post. This week's data are "advance" estimates, subject to revision. The average revision of GDP growth from advance to final estimate, without regard to sign, is a substantial 1.1 percentage points.)
The chart shows that the contribution of net exports to growth was positive during the middle years of the recovery, and had just begun to turn positive again after a dip in 2014 and 2015. Because the net export component of growth is volatile from quarter to quarter, I have drawn the chart to highlight the four-quarter moving average, with the actual quarterly data in the background. Whether we look at the quarterly data or the moving average, though, it is clear that the hopeful trend toward stronger net exports was reversed in the last quarter of 2016. . . .
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