Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The First Estimate for Q4 Real GDP Growth is 1.9% at an Annual Rate
Posted Under: Data Watch • GDP

 

Implications:  Today's GDP report was a fitting last report for the Obama Administration, with real GDP growing at a 1.9% annual rate in Q4, up 1.9% from a year ago and up at a 1.9% annual rate in the past two years.  That's right in-line with the 2.1% annual growth rate since mid-2009 when the Great Recession ended.  In other words, the economic recovery remained a Plow Horse through at least the end of 2016.  However, the details of today's report were better than the headline.  Consumer spending, business investment, and home building – what we call "core" GDP – grew in Q4 at a combined annual rate of 2.8% and is up at a 2.6% rate in the past two years.  The big problem in Q4 was that net exports were a huge drag on real GDP after being a positive for growth in the prior two quarters.  We anticipate an acceleration of growth from a Plow Horse pace if, and when, the Trump Administration follows through on pledges to cut tax rates, cut spending, replace Obamacare, and cut business regulations, particularly on building-out energy infrastructure.  By contrast to the 2.1% trend of the past seven and a half years, at the same points after the recessions of 1981-82 and 1990-91, the economy had grown at average annual rates of 4.4% and 3.6%, respectively.  Although the labor force has been growing and will continue to grow more slowly than during those prior long economic expansions, the implementation of new technologies like 3D-printing can lift productivity growth as well.  In turn, faster growth would justify more interest rate increases by the Federal Reserve, which now plans on making three 25 basis point rate hikes later this year.  But even today's figures support higher rates.  Nominal GDP – real GDP growth plus inflation – rose at a 4% annual rate in Q4 and is up 3.2% in the past two years, much higher than the 0.5% - 0.75% target range for short-term rates. 

Click here for PDF version

Posted on Friday, January 27, 2017 @ 10:31 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2018 All rights reserved.