US Economic Growth declined, Bank of Japan, Consumer Sentiment fell

January 29, 2016

Friday – January 29

U.S. economic growth declined in the fourth quarter of 2015 as businesses ramped up efforts to reduce inventory, while the stronger dollar and weak global demand weighed on exports. The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) fell to 0.7% in the final three months of 2015 from 2.0% in the third quarter. For all of 2015, GDP rose 2.4%, which is below what is considered a healthy economy.

In unexpected news, the Bank of Japan (BOJ) moved to negative interest rates overnight, in an effort to kick start its struggling economy. They cited the high price of oil as one headwind weighing on their economy. The BOJ also said that it would push rates even lower if needed. The move means that savers will be charged for the banks to hold their money. Negative rates also encourage banks to lend more and consumers to spend more than they save.

The extreme Stock market volatility in January caused consumers to be a bit less rosy regarding current economic conditions than what was originally reported earlier in the month. Consumer Sentiment fell to 92.0 late in the month, down from 93.3 in the initial reading. In addition, consumers feel that the job market has reached its peak and that consumers may remain frugal on spending.