A Negative 4th Quarter GDP Report
GDP for the 4th quarter 2012 fell to a
-0.1%. This is a big drop from the 3rd quarter report
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,
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
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.
Bureau of Labor Statistics 4th Quarter GDP Report