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SMALL BUSINESS NEWS

30 Jan 2013

 

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A Negative 4th Quarter GDP Report

The GDP for the 4th quarter 2012 fell to a -0.1%.  This is a big drop from the 3rd quarter report of 3.2%.

The reported published by the Bureau of Labor Statistics showa decrease in real GDP in the fourth quarter primarily reflected negative contributions from private inventory investment, federal government spending, and exports that were partly offset by
positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, decreased.

During the 4th quarter private inventory investment, federal government spending state government spending, exports and exports were down.
Nonresidential structures decreased 1.1 percent; it was unchanged in the third quarter.  Equipment and software increased 12.4 percent in the fourth quarter, in contrast to a decrease of 2.6 percent in the third.  Real residential fixed investment increased 15.3 percent, compared with an increase of 13.5 percent.
This slowdown in the economy will likely have a negative impact on small businesses.  Especially those that rely on government spending.  Small businesses that rely on military contract spending will be hardest hit. National defense spending decreased 22.2 percent, in contrast to an increase of 12.9 percent in the 3rd quarter.
However, the increase in personal income of 7.9 percent in the fourth quarter, compared with an increase of 2.2 percent in the third is a positive for small businesses.  The acceleration in personal income primarily reflected a sharp acceleration in personal dividend income, an upturn in personal interest income, and an acceleration in wage and salary disbursements
Another positive is the increase in Disposable personal income of 8.1 percent  in the fourth quarter, compared with an increase of 2.1 percent in the third.  Real disposable personal income increased 6.8 percent, compared with an increase of 0.5 percent.

Small businesses in the Information Technology (IT) industry may not be negatively impacted.  Equipment and software spending increased 12.4 percent in the fourth quarter, in contrast to a decrease of 2.6 percent in the third.

Sources:
Bureau of Labor Statistics 4th Quarter GDP Report


By Owen Daniels

 

 

 

 

 

 

 

 

 

 
 

 

  
 

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