According to Osprey Associates, official data has shown that the US economy grew at an annualized rate of just 0.7% in the fourth quarter of 2015 compared with the same quarter a year ago.

The data points to a marked deterioration in the rate of expansion especially when compared to the 2% the economy managed in the third quarter and lends weight to increasing forecasts that the US economy will be in recession by the second quarter of 2016.

A slowdown in consumer spending is largely being blamed for the lackluster performance and, according to James Conroy, chief economist at Osprey Associates, the fact that the economy grew so poorly in the final quarter of the year is even more troubling.

“The final quarter of the year really ought show robust activity in consumer spending given that it plays host to the big holidays like Thanksgiving and Christmas,” he said. “The fact that the data came in so weak even after a year of low gasoline prices suggests that the US economy will almost certainly contract in the 1st quarter of 2016,” he added.

Upon the release of the the US Commerce Department data, stock futures ticked up with investors betting that the slower than expected growth would reduce the Federal Reserve’s appetite for further interest rate increases in 2016.

Osprey Associates reiterated its belief that the Fed will be forced to roll back the 25 basis point hike it delivered in mid-December and raised the odds the central bank will join the ECB and, now, the BoJ in taking interest rates negative before, potentially, introducing a new QE program.

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