The final quantification of the Bureau of Economic Analysis fourth quarter GDP growth rate was released today, reflecting an anticipated increase from the prior two estimations. The last revised estimation of GDP growth (February) was +2.5%, the final revised estimate is +2.9% growth.
A massive increase in consumer spending (+4%) around the October through December 31st time-frame (Q4) was offset by those dollars purchasing a large portion of imported products. The GDP growth deduction from import purchases was 1.99%. [See table #2, line 50 pdf here]
In short, American consumers spent significantly more than usual in the holiday season; however, many of those purchases were foreign goods.
From the BEA Report – Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2017 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 2.5 percent. With this third estimate for the fourth quarter, the general picture of economic growth remains thesame; personal consumption expenditures (PCE) and private inventory investment were revised up. (more)
We anticipated this adjusted increase back when the first BEA result was posted, for two reasons: #1) The original estimations were contingent upon almost no domestic inventory remaining at the end of Q4 (highly unlikely); #2) The import deduction was the largest deduction in the past decade (possible, but again too early to quantify). The resulting adjustments announced today reflected exactly these two items.
(Via CNBC) While robust consumer spending curbed the accumulation of inventories, the slowdown in inventory investment was not as steep as previously reported.
Inventory investment rose at a rate of $15.6 billion in the fourth quarter instead of the previously reported $8.0 billion pace. (link)
Look closely at the last part from CNBC above. The BEA underestimated inventory investment by 50%? Think about that…. you don’t miss figures by that amount unintentionally. It’s called ‘sandbagging’. I digress.
The bottom line – in Q4 we exported more than the past 4 years (+.83%), but we imported more than any time in the past ten years (-1.99%). The net impact was a deduction from GDP growth by -1.16%.
[*note* a reasonable correction in the trade imbalance of 25% (through smart trade deals) means the Q4 GDP could have been actually 3.5% instead of 2.9%]
The cumulative net result was an end of year (measured from the fourth quarter of 2016 to the fourth quarter of 2017), real GDP increase of 2.6 percent, compared with an increase of 1.8 percent during 2016.
MAGAnomics works. We just need to support Trump and keep on keeping-on.
Now think about this….
President Trump appointed Gary Cohn to keep Wall Street invested; and throughout 2017 the Trump administration kept their trade cards close to the chest – it worked. The Stock Market bought into the ploy that POTUS Trump would not disrupt the dynamics of Wall Street’s multinational global trade ideology.
However, they were not paying attention to the granular details under the radar, as evidenced by the action of Treasury Secretary Stephen Munchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. Throughout 2017 there was a ton of pre-positioning of assets taking place.
As soon as Team Trump gained massive increases in Wall Street (stock market) evaluations, we now enter year two where President Trump dispatches Gary Cohn and enlists Peter Navarro to carry out the MAGAnomic America-First agenda which includes rapid-fire renegotiated trade deals.
…in addition to MAGAnomic winning, you might just stop a nuclear war with North Korea.
Stay small, think BIGLY.