March 4, 2019 — Q4 GDP Beats Expectations, but it’s not Time to Celebrate yet

MARCH 4, 2019 – Q4 2018 GDP BEATS EXPECTATIONS, BUT IT’S NOT TIME TO CELEBRATE YET

US GDP for the last quarter of 2018 was finally released after a two-month delay caused by the partial government shutdown.  Economic growth came in better than expected, with GDP rosing 2.6 percent to close out the year.  Economists were expecting a gain of 2.2 percent after a 3.4 percent rise in the third quarter. Annual 2018 real GDP increased by 2.9 percent.

Growth was driven by consumer spending, exports, private inventory investment and government spending. Looking forward, employment remains strong and wages are rising at the fastest pace seen during the recovery.  However, poor retail sales are worrisome, as consumers drive nearly 70 percent of all growth in the US. Also troubling is the build up of inventory during the second half of last year; those goods may create a drawback in production this year.

The February jobs report will be released later this week which will be a key indicator of the resilience of the domestic economy. Fed Chair Powell said the strong labor market is a reason to remain optimistic about the US economy.

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