The fourth quarter Real GDP report was issued last Friday. It was estimated to be 2.6%, below our estimate of 3.1%. We expect upward revisions to this number when more complete data becomes available in the next two months. The details were as we expected. Personal consumption expenditures jumped by 3.8% in the quarter, as compared to 2.2% in the third quarter. Capital spending increased by 7.6%, as compared to 2.4% in the third quarter.

Both federal, state, and local spending grew at a much better rate than any time in the last two years. The consumption side of the economy reflected accelerating rates of growth. The smaller total growth was effected by an expanding trade deficit and very low inventory accumulation. The trade deficit expanded from -$597.5 Billion in the third quarter to -$652.6 Billion in the fourth. Part of this expansion was the impact of the hurricanes in the third quarter that shut down ports and caused imports to be delayed. This increase in the trade deficit was…

ProBank Austin Advisor – January 29, 2018