Note on GDP slow down.

By now, you have seen the news reports that GDP growth dropped dramatically to 0.6% in the 4th quarter of 2007 (see GDP Growth Slowed in 4th Quarter, As Housing Continues Its Drag – WSJ.com, Growth Slowed Drastically in 4th Quarter – New York Times, Economy nearly stalled in 4th quarter; suffers worst year since 2002 – Los Angeles Times, Economic Growth Slows in Last Quarter – washingtonpost.com). Here is what BEA: News Release: Gross Domestic Product:

The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn in inventory investment and decelerations in exports, in PCE [personal consumption expenditures], and in federal government spending that were partly offset by a deceleration in imports and an acceleration in state and local government spending.

Deceleration in exports? So much for the rest of the world picking up the slack.

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