Advance Gross Domestic Product 4th Quarter 2017Submitted by Atlas Indicators Investment Advisors on February 6th, 2018
America’s economy decelerated in the final three months of 2017 according to Gross Domestic Product (GDP) data from the Bureau of Economic Analysis (BEA). On an inflation-adjusted annualized basis, output grew by 2.6 percent from October through December. This followed improvements of 3.1 percent and 3.5 percent in the second and third quarters respectively. Despite the slower headline figure, there was some encouraging information deeper in the report.
Consumers led the way during the period. Personal consumption expenditures increased 3.8 percent, accelerating from 2.2 percent from July through September. Durable goods purchases shot up 14.2 percent to lead the increases. Nondurable spending was up an impressive 8.2 percent. The improvement in services consumption was less impressive (up 1.8 percent) but accelerated versus the prior period (up 1.1 percent).
Business investment increased 3.6 percent. While it decelerated versus the third quarter, it has been up in five of the past six quarters. Home builders seemed to gain a new confidence in the strength of consumers as well; construction of residential structures increased 11.6 percent after falling in the prior two quarters.
Government spending increased at all levels. Federal outlay grew 3.5 percent as national defense outlays surged 6.0 percent and nondefense spending moved up by 0.1 percent. State and local governments joined the spree, spending 2.6 percent more than in the prior quarter.
Finally, net exports deteriorated, reaching an annualized trade deficit of $652.6 billion. This is probably symptomatic of the American economy being stronger than that of our trading partners. As mentioned earlier, consumer spending was strong, and this likely led, at least in part, to the 13.9 percent gain in imports which far exceeded the 6.9 percent uptick for exports.
Gross domestic product is a broad measure of the economy’s overall health, and America’s output looks rather fit these days. Like all other GDP releases, this will be subject to at least two revisions. Most recently, the revision trend has been upward; let’s hope for more of the same in the next print by the BEA.