Here’s what economists are saying about the 2.6% growth in gross domestic product during the fourth quarter, which was faster than consensus expectations.
Read: Economy slows to 2.6% in fourth quarter, GDP shows, but it still shows lots of muscle
• “Consumer spending continued to grow solidly and, most encouragingly, business investment growth recovered sharply after a dip in the third quarter. Despite big external headwinds and financial market volatility in the fourth quarter, U.S. firms are not retrenching sharply on capex. Labor market strength and ongoing fiscal stimulus should see domestic demand expanding by enough to keep GDP growth above potential in 2019, despite a rising drag from net trade.” — Brian Coulton, Fitch Ratings.
• “U.S. fourth-quarter GDP was not bad, not bad at all, considering all the fretting about a slowdown that dominated the news flow during the quarter. The 2.6% annualized pace was about a half point above our forecast and the consensus, helped by a firmer reading than we expected on business investment spending (up 6.2% annualized).” — Avery Shenfeld, CIBC Economics.
• “At a 2.6% gain, fourth quarter GDP was a welcome upside surprise, and further cast doubt on the veracity of the weak December retail numbers. While the economy is slowing, perhaps to a plateau of about 2% over this year, that’s plenty of economic heat to keep jobs increasing at a strong pace, and to keep wages rising.” — Robert Frick Navy Federal Credit Union.
• “Concerns related to trade and the government shutdown had a significant impact on sentiment and stock prices SPX, -0.12% late last year, but had a more limited effect on actual activity. The sharp improvement in consumer sentiment and rebound in equity markets since the beginning of the year are positive signs, but are similarly unlikely to provide a material lift to growth.” — Jim Baird, Plante Moran Financial Advisors.
• “Growth overshot expectations because investment in intellectual property rocketed at a 13.1% rate, nearly double the underlying trend pace. These numbers are volatile and a much smaller gain is likely in the first quarter.” — Ian Shepherdson, Pantheon Macroeconomics.
Research & development spending is exploding, advancing 13.5% annualized in Q4, climbing 9.9% over the last year. Private R&D spending now represents 2.3% of US GDP, an all-time record. R&D spending is usually a good sign for future productivity growth. pic.twitter.com/JQEXFEzZn8
— Renaissance Macro (@RenMacLLC) February 28, 2019
“Business investment was a big positive surprise, with nonresidential spending soaring 6.2% on the back of a 6.7% jump in equipment spending and a honking 13.1% increase in intellectual property products. Tariffs and the trade war are denting business sentiment, but evidently not enough to seriously derail hiring or spending plans.” — Sal Guatieri, BMO Capital Markets.
