Second estimate of U.S. Q4 2017 economic growth affirms solid expansion

Second estimate of the U.S. fourth quarter economic growth affirms strong growth at the end of 2017. The BEA’s second estimate showed that the U.S. economy expanded 2.5 percent in the December quarter. That was slightly lower than the first estimate, but consistent with expectations. Headline consumer spending growth remained same at 3.8 percent, although services spending were a bit stronger at 2.1 percent at the expense of a downward revision to goods spending, noted TD Economics in a research report.

Business investment was downwardly revised slightly to 6.6 percent, thanks to lower intellectual property investment. Investment in structures and equipment were both upwardly revised modestly. Residential investment rose at an even faster than originally reported, rising 13 percent at an annualized rate. Residential structures were impacted by disruptions caused by Hurricanes Harvey and Irma in the September quarter, with activity clearly rebounding in the fourth quarter.

The drag from inventories was upwardly revised a bit, negatively contributing 0.7 percentage points from the headline figure. Exports and imports were little changed, negatively contributing 1.1 percentage points from growth in the fourth quarter.

“The Fed already knew that the economy had healthy momentum to end 2017, so this does little to change its thinking on the outlook”, stated TD Economics.

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