2. Q4 GDP: "Overall, it was just OK"
The initial fourth quarter U.S. GDP reading beat expectations, rising 2.6%, which puts the annualized figure at 2.9% (or 3.1% depending on whom you ask).
DRW Trading strategist Lou Brien breaks the report down for Axios.
By the numbers:
- Personal consumption was +2.8%, missing expectations. Goods consumption was +3.9% and services consumption was +2.4%.
- Gross private investment was +4.6%.
- Net exports were -$963.2 billion, the largest deficit on record, but little changed from the previous quarter which was the previous record deficit.
The big story may have been intellectual property, which saw a 13.1% increase on the quarter, registering the second highest reading since 1999, and contributing 0.56% of the report's total.
- The Q4 GDP Deflator was +1.8% and the PCE core inflation measure was +1.7% on the quarter, both a tenth higher than forecast.
The big picture: "Overall, it was just OK; unremarkable except for a few data points," Brien said.
- "Seventy-four percent of the GDP increase was personal consumption. The inventory buildup was large, but it was large in the previous quarter as well, so this sector added just 0.13% to the total."
Relity check: "Net exports were a record deficit, -$963.2 billion, but it was not too much worse than the previous quarter (the previous record deficit), so there was only a slight drag on the report, just -0.22%, whereas the previous quarter was about -2%."
On the other hand: "The inventories were quite high. But then, after two large accumulations in consecutive quarters, maybe this is ready for a down quarter and that could hit the upcoming GDP reports; we'll have to see."
The bottom line: "Annualized rate for 2018 was 2.9%, matching the best year during the Obama Administration."