This column originally appeared on Real Money Pro at 10:21 a.m. EST on Feb. 4.NEW YORK ( Real Money) -- While fourth-quarter 2012 real GDP fell by -0.1%, reflecting lower exports, a decline in federal government spending and a large drop in inventory investment, if one takes out the contraction in inventories, final demand was +1.1% (annualized). The fourth-quarter annual rate of inflation was +0.6%. For the full year of 2012, real GDP grew by +2.2%, and inflation rose by +1.8% -- nominal GDP increased by a tepid +4% (and those with plenty of juice from the Fed). Growth remains slow, as the household sector continues to deleverage. Despite market optimism, the consumer sector remains the Achilles' heel to growth, as I don't see the deleveraging ending anytime soon:
- Household savings rates are well below historical averages.
- Home values, though up by nearly 6% in 2012, are still close to 28% below the previous peak six years ago.
- Higher interest rates are already taking a bite out of refinancing. (Refinancings liquefy the consumer and infuse cash, generally serving to raise personal consumption expenditures.)
- Most importantly, consumers will absorb nearly $250 billion of tax increases, the Obamacare surcharge and possible government spending cuts (March sequester).