ECONOMIC REPORT OF THE PRESIDENT

cold weather.1 The economy rebounded in the second quarter, growing at a
3.9-percent annual rate followed by more steady growth of 2.0 percent in the
third quarter. Growth slowed again in the fourth quarter to 0.7 percent at an
annual rate, weighed down by declines in inventory investment and exports.
The price of oil, as measured by the spot price of European light crude
oil from the North Sea (known as Brent), fell to $37 per barrel at the end of
December 2015, about a third of its level in June 2014 (Figure 2-2).
The oil-price decline from mid-2014 to the end of 2015 reflected both
increased global supply of oil, including rising production in the United
States, Saudi Arabia, and Iraq, and slower global economic growth. It is difficult
to precisely separate the role of supply and demand, but the comparison
to non-energy commodity prices highlights the mix of factors affecting oil
prices. Non-energy commodity prices also declined over this period—a sign
of weakening global demand. But the non-energy commodity price decline
of about 25 percent was considerably less than the about 65-percent decline
in oil prices, pointing to the role of oil supply in lowering prices. Lower oil
prices affect the U.S. economy through numerous channels (CEA 2014).
On balance, CEA estimates that lower oil prices directly boosted real GDP
growth by 0.2 percentage point during 2015, despite the adverse impacts on
domestic energy producers and manufacturers that sell to the energy sector
(see Box 2-1). Relatedly, the decline in oil prices noticeably held down price
inflation and supported real income growth in 2015. Oil and commodity
prices continued to fall sharply in early 2016 and are likely to continue to
affect consumers and energy producers.
Foreign growth slowed markedly in 2015, particularly in China and
other emerging-market economies, with the International Monetary Fund’s
(IMF) October 2015 report estimating that world year-over-year growth was
3.1 percent in 2015, the slowest rate of global growth since 2009 (see Chapter
3 for more discussion). Spillovers from the slowing pace of China’s growth
affected many commodity-exporting countries. Slowing foreign growth
sharply reduced U.S. exports, as the growth rate of our trade partners was
0.4 percentage points lower during the four quarters ending in 2015:Q3 (the
latest available data) than during the year earlier period.
1 Three snowstorms occurred during 2015:Q1 that were so severe that the National Climate
Data Center rated them in the Northeast Snowfall Impact Scale (NESIS). NESIS scores are a
function of the area affected by the snowstorm, the amount of snow, and the number of people
living in the path of the storm (Kocin and Uccellini 2004). During the 59 years on record,
2015:Q1 was only the fourth time that a quarter was impacted by three or more NESIS-rated
storms.
The Year in Review and the Years Ahead | 53