Macro of the Week – US GDP disappoints

Provisional readings for US Q4 2017 GDP growth came in at 2.6%, slightly below the 3% figure expected by the market. This is an annualised figure and therefore growth for the quarter was actually only 0.1% behind expectations. Strong imports were the main reason for the surprise to the downside, subtracting 1.1% from the growth. Additionally inventories fell, subtracting a further 0.7%. However it was not all bad news as consumer spending rose 3.8% while fixed investment and government spending were up 7.9% and 3% respectively. The spending on fixed investment is especially promising as it is a sign that companies are finally starting to increase cap-ex spending, rather than using cash balances to pay dividends/perform stock buybacks. However this spending was largely on transport vehicles, which can be very volatile, and perhaps only short term.