U.S. Outlook: Headline GDP growth for Q4 comes in on the light side

Scott Anderson
Posted by Scott Anderson
Chief Economist

U.S. GDP growth slowed to 2.6% in the fourth quarter, following a 3.2% annualized growth rate in the third quarter.

Graph showing quarterly GDP growth figures from 2015, with forecasts for 2018This number was well below the consensus forecast for 3.0% growth but nearly in line with our forecast for 2.7% growth to close out the year. (This forecast was good enough for Bank of the West to maintain our number one ranking on Bloomberg for forecasting U.S. GDP growth over the past two years.)

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Jan. 26.

Key observations:
  • A surge in imports and large slowdown in business inventory gains offset stronger growth last quarter in real consumer spending, residential investment, equipment spending, and government spending.
  • We boosted our forecast for Q1 2018 GDP growth to 2.4% from 2.3% this morning, anticipating more help from business inventory growth in the first quarter and a bit more business equipment spending than we forecast prior to today’s GDP release.
  • This modest under-shoot on headline U.S. GDP growth in the fourth quarter will be completely overlooked by the markets and the Federal Reserve.
  • We continue to expect the next FOMC rate hike at the March FOMC meeting.


Read my full report.


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