Pollack: Very strong Q4



January 29th, 2018

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

Don’t let the headlines about 4th quarter real GDP fool you.  The 4th quarter was very strong.  Even though the numbers showed a 2.6% growth compared to an expectation of 3.0%, the components of real GDP tell a great story.

In the 4th quarter, consumer spending was up a healthy 3.8%.  It was the best holiday season in 12 years.  Business investment rose 6.8%.  This was the fourth consecutive solid showing.  Businesses have stepped up their outlays because of a revival in oil drilling and a resurgent global economy.   Equipment outlays did especially well, up  11.4%, as companies chased labor saving technology in the light of tightening labor markets.

Indeed, a slowdown in inventories and a larger trade gap shaved 1.8 percentage points off 4th quarter growth.  Otherwise, real GDP growth would have been over 4.0%.  The slowdown in inventories is likely to be short lived.  With the economies of other industrialized nations picking up, the trade gap will probably show slower growth.  Overall, the economy continues to be strong.

U.S. Snapshot:

  • 4th quarter real GDP grew at a 2.6% annual rate as discussed above (see chart below).  For the year as a whole, 2017 was up 2.3% compared to an anemic 1.5% in 2016.  The acceleration in real GDP from 2016 to 2017 reflected upturns in nonresidential fixed investment and exports and a smaller decrease in private inventory investment.  These were partially offset by a slowdown in the rate of growth in residential fixed investment and in state and local government spending.  Imports, which are a subtraction in the calculations of GDP, accelerated.

  • Leading indicators rose to 107.0 in December.  That’s up from 106.4 in November and 101.2 a year ago.  That’s a strong 5.7% gain over the year. Manufacturers’ new orders for durable goods rose at a rapid rate in December and now stand 11.5% above year earlier levels. Excluding the volatile aircraft sector, there was a modest decline for the month but the year over year numbers were still up 8.4%.

  • Interest rates on 30-year fixed rate mortgages continued to rise for the week of January 25th.  Rates rose to 4.15% compared to 4.04% a year ago and 3.99% at year end.

  • Existing home sales slowed modestly in December when compared to November.  But, sales were up 1.1% from the similar 2016 period.  From December to December, the median price of an existing home rose 5.8%.

  • New home sales in December were 14.1% higher than they were a year ago.  That’s 625,000 units at an annual rate compared to 548,000 units at an annual rate in December 2016.  For 2017 as a whole, new home sales increased 8.3% to 608,000 units.

Arizona Snapshot:

  • Arizona real GDP rose 2.9% in the 3rd quarter of 2017 at an annual rate and stood 1.8% over year earlier levels. These numbers are likely to be revised.

About EDPCo

Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.

For more information, contact –

Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251

Share this!

Additional Articles

Get Our Twice Weekly Newsletter!

* indicates required

Rose Law Group pc values “outrageous client service.” We pride ourselves on hyper-responsiveness to our clients’ needs and an extraordinary record of success in achieving our clients’ goals. We know we get results and our list of outstanding clients speaks to the quality of our work.

News Categories