U.S GDP Q4 2012 Unexpectedly Fell by 0.1%

The bureau of economic analysis came out today January 30th with its first estimate of the growth rate of the U.S. Gross Domestic Product for the fourth quarter of 2012. According to the latest update, U.S output of goods and services growth rate fell by an annual rate of 0.1% in Q4 2012. This fall came after the US GDO expanded in the third quarter by 3.1%. This drop in GDP is related to the 5% drop in real federal government consumption expenditures. This news is likely to pull back up gold and silver prices.

According to the latest update, the real U.S GDP in the fourth quarter of 2012 (first estimate) contracted by an annual rate of 0.1%. This figure is much lower than many analysts had expected. In the second quarter of 2012 the GDP grew by 1.3%; the real U.S GDP for Q3 2012 expanded by 3.1% (according to the recent revision). This drop in GDP in the last quarter of 2012 seems to stem from the drop in government spending including a 22.2% decrease in national defense spending. This report may also affect the Fed’s monetary policy as it shows the U.S economy isn’t out of the woods just yet.

The chart below presents the developments of the real U.S. GDP (in annual rates) growth rate between 2009 and 2012.  As seen, the recent drop in the real GDP means the growth rate in the fourth quarter was the lowest rate since the second quarter in 2009.

U.S. GDP update 2009-2012 US GDP (percent) January 2013

This lower than expected growth rate may pull up the prices of gold and silver: it may raise the demand for safe haven investments.

Currently, the U.S stock markets are slightly rising; some major commodities are trading up: major energy commodities prices including crude oil prices are currently slightly rising; gold and silver are sharply trading up; the U.S dollar is falling against major currencies including Euro and British Pound.

For more on this subject: