{"id":1465,"date":"2019-02-28T12:30:41","date_gmt":"2019-02-28T17:30:41","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1465"},"modified":"2019-02-28T12:30:41","modified_gmt":"2019-02-28T17:30:41","slug":"fourth-quarter-gdp-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1465","title":{"rendered":"Fourth Quarter GDP and Weekly Jobless Claims"},"content":{"rendered":"\n


<\/strong><\/p>\n\n\n\n

KEY DATA:<\/strong> GDP: 2.6%; Consumption:\n2.8%; Business Investment: +6.2%; 2018 (Annual): +2.9%\/ Claims: +8,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cGrowth is settling down to more normal,\nsustainable levels as the tax cut impacts fade.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  As expected, economic growth came in at a\nvery solid level at the end of last year. \nOf course, it is slower than the previous two quarters,<\/em><\/strong> which\nevery economist outside the White House forecast. The growth rate represents a\nmoderation not a major slowdown, a critical distinction.<\/em><\/strong>  For all of 2018, GDP expanded at the strongest\npace since 2015.  Consumers spend solidly on just\nabout everything<\/em><\/strong>, with most categories rising solidly.  Business investment was decent, though not\ngreat<\/em><\/strong>.  Firms purchased software\nand equipment and added to inventories, but didn\u2019t build any new\nstructures.  The level of inventory\nbuilding was extremely high and likely the result of tariff fears. That could\nturn around sharply this or the second quarter, especially if any trade\nagreement is concluded.  Housing, not\nsurprisingly, declined, a trend we could see continue for a while.  Meanwhile, the trade deficit continued to\nwiden<\/em><\/strong>.  Our exports fell, largely\nbecause of lower farm sales, but imports rose. Tariff issues likely distorted\nthe numbers.<\/em><\/strong>  Finally, a surge in\ndefense purchases offset a drop in federal nondefense and state and local\ngovernment spending.  Inflation\nremained tame, running below 2%.<\/em><\/strong><\/p>\n\n\n\n

Job claims jumped last week, but they remain low<\/em><\/strong>.   MARKETS AND FED POLICY IMPLICATIONS:<\/strong>The\nslow but steady deceleration in the economy continued in the last quarter of\n2018 and we could see an even weaker number for the first quarter. <\/em><\/strong> Vehicle demand has softened and coupled with\nthe government shutdown, we are likely to see lower consumer spending in first\nquarter.  There was a huge surge in\nbusiness software purchases and it is hard to see the excessively large gain\nrepeated.   The inventory build looks to be unsustainable\nand it is not clear what will happen to the trade deficit.  I have no idea when or if a trade agreement\nof any kind will be consummated.  So, the\nbest guess right now is that first quarter GDP growth will come in around 2%, <\/em><\/strong>give\nor take a quarter percent.  Basically,\nwe are moving back to a sustainable growth pace <\/em><\/strong>that we experienced\nduring most of the Obama years.  Of\ncourse, most people didn\u2019t think that was a good growth rate, but the reality\nis that is what trend growth looks like.<\/em><\/strong>With the tax cut impacts largely done with\nand Europe and China slowing, it is hard to see how growth can accelerate\nsharply.<\/em><\/strong>  That is actually good\nnews.  It means inflation is not likely\nto jump so the Fed can keep on its current path.  <\/em><\/strong>Of course, given Mr. Powell has more\nmoves than Gayle Sayers had, who knows when the Fed will start rethinking the\nrethinking it rethought – or whatever. \nRegardless, rates are going nowhere for a while.  As for the equity markets, the one major hope\nis that a trade agreement will remove the uncertainty overhanging investor\nthinking.  That could provide a short-term\nboost, but why China and Europe would suddenly buy lots more U.S. product after\nthe initial push occurs is beyond me. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: GDP: 2.6%; Consumption: 2.8%; Business Investment: +6.2%; 2018 (Annual): +2.9%\/ Claims: +8,000 IN A NUTSHELL:  \u201cGrowth is settling down to more normal, sustainable levels as the tax cut impacts fade.\u201d WHAT IT MEANS:  As expected, economic growth came in at a very solid level at the end of last year.  Of course, it … Continue reading Fourth Quarter GDP and Weekly Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1465","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1465","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1465"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1465\/revisions"}],"predecessor-version":[{"id":1466,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1465\/revisions\/1466"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}