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
 
  Real GDP was Revised to a 2.5% Annual Rate in Q4
Posted Under: Data Watch • GDP

 

Implications:  Not much "new" news on GDP.  The second reading for real GDP growth was revised ever so slightly lower to a 2.5% annual rate for the fourth quarter, matching consensus expectations.  An upward revision to residential investment was not enough to offset slight downward revisions to inventories, government purchases, and business investment.  The bottom line is that today's report should not change anyone's impression about the economy.  We expect real GDP to grow at a 3%+ rate in 2018, which would be the first year that's happened since 2005.  In particular, the tax cuts enacted in late December and the deregulation coming from Washington, DC are going to help spur faster growth.  Meanwhile, today's report reminds us that the Federal Reserve is behind the curve.  Nominal GDP growth (real growth plus inflation), was revised slightly lower to a 4.9% growth rate in Q4 versus a prior estimate of 5.0%.  Still, nominal GDP grew 4.4% in 2017 and is up at a 3.9% annual rate in the past two years.  All of these are much higher than the Fed's current target for short-term rates of 1.375%.  As recently as December, the median projection from the Fed was three rate hikes in 2018.  We think the next revision to those projections (due March 21) will show a split between three and four.  At present, the federal funds futures market has about 37% odds of four rate hikes or more.  In the end, we think the Fed will raise rates four times this year, 25 basis points each time.  In other news this morning, the Chicago PMI, which measures manufacturing sentiment in that region, declined to a still solid 61.9 in February from 65.7 in January.  As a result, we expect a slight decline in tomorrow's national ISM Manufacturing report, but also expect that report to keep showing robust growth in the factory sector.  In housing news this morning, pending home sales, which are contracts on existing homes, declined 4.7% in January after a 0.5% gain in December.  These reports suggest existing home sales, which are counted at closing, could be lower in February. 

Click here for PDF version

Posted on Wednesday, February 28, 2018 @ 11:08 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.