It was mixed signals coming out of The Commerce Department's fourth quarter real gross domestic product (GDP) report released Wednesday, with an upgrade to previous estimates but a deceleration from third quarter growth. The average of real GDP and real GDI, which serves as a supplemental measure of USA economic activity, increased 1.9% in the fourth quarter, compared with an increase of 2.8% in the third.
The upward revision to the fourth-quarter growth estimate also reflected less inventory reduction than previously reported.
For the whole of 2017, the United States economy grew 2.3 per cent compared to 2016.
The gain in fourth- quarter profits from a year earlier, coupled with lower corporate taxes, augurs well for business investment and employment.
Consumption hit the highest pace in three years, as consumer spending on goods saw its biggest quarterly bounce in almost 12 years after an upward revision of three tenths to 7.8 percent. Housing data have been generally weak and the trade deficit hit a more than nine-year high in January.
Economists are optimistic the economy will reach the president's 3 percent annual growth goal this year, pointing to the White House's $1.5 trillion income tax cut package and a forecasted increase in federal spending.
Estimates of the first-quarter GDP growth rate are now just below 2.0 percent. The Fed also lifted its economic growth projections for this year and 2019.More news: McCaskill's Beverly Hills fundraiser with Obama sparks fiery attacks
As a result, an alternate measure of growth, gross domestic income, rose at a 0.9 percent rate in the October-December period.
The rosier revised estimate for the October-December period was a modest shot in the arm for President Donald Trump, whose trade policies face stiff opposition at home and overseas and has sent shudders through stock markets. The PCE price index increased 2.7% compared with an increase of 1.5% quarter-to-quarter.
Textile and apparel imports to the US rose 3.2% in 2017 to 64.89 billion square meter equivalents and gained 1.27% to $106 billion in value terms. The Commerce Department reported on Wednesday that both wholesale and retail inventories increased solidly in February. That was still the best performance since the third quarter of 2014.
Nonresidential fixed investment rose 6.8 percent, up from 6.6 percent. Momentum likely slowed in the third quarter amid weak home sales.
Overall, consumer spending grew at the fastest pace in three years during the fourth quarter of 2017.
"Still, today's report shows a strong USA economy as of the fourth quarter", Navin said.