ACTV - U.S. GDP Confounds Slowdown Fears But 'Job Done' On Inflation

2024-01-25 11:07:00 ET

Summary

• Fourth quarter 2023 GDP growth beat all expectations thanks to strong consumer and government spending plus a positive contribution from net trade.
• First quarter GDP growth is expected to be weaker based on business surveys, but the Fed is close to declaring victory on inflation with the second consecutive 2% quarterly core inflation reading.
• For the bond bulls who fear a bumpier, weaker outlook for the economy over the next couple of years, it could be even greater.

By James Knightley

GDP beats all expectations

US fourth quarter GDP growth came in at 3.3% quarter-on-quarter annualised, well above the 2% consensus and above every forecast in the Bloomberg survey. The personal consolation is that at least we were closest (ING predicted 2.5%). The details show consumer spending was very strong, rising 2.8%, while government spending increased 3.3% and non-residential fixed investment increased 1.9% with residential investment up 1.1%. Inventories added 0.07 percentage points to growth, while net exports added 0.43pp....

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