Fourth Quarter 2015
U.S. GDP expanded by 2 percent in the 3rd quarter, similar to the average annual growth rate for the first half of the year. The trend of solid consumer spending, which is the largest component of the GDP calculation, persisted throughout the latter half of the 2015. A significant tailwind to this increased spending action has been gas prices remaining low. In fact, according to a MasterCard survey, consumers are now spending 72 cents from every dollar saved due to reduced prices at the pump. Also, motor vehicle sales had a record year, with over 18 million units sold. After being nearly cut in half in 2014, oil prices declined another 30 percent in 2015, ending the year at slightly over $37 a barrel. Such a rapid retreat in a major commodity price is often the result of dwindling demand, but this looks like an excess supply story. According to JP Morgan and Energy Information Administration estimates, domestic oil production has increased 19 percent since 2013, with consumption increasing just 3 percent.