Market Commentary

GDP

gross domestic product

This week the final revision of GDP for 2017 came in at 2.9%, just shy of the closely watched 3% number. The reason it is closely watched is because since the 2008 recession the U.S. economy has not grown at 3% on an annual basis. A number that has always been achieved coming out of recession for many decades except this time. I speculate that the major changes in banking and in healthcare coming out of the last recession retarded the growth as companies struggled to implement the new regulations.

The main driver for the revision was the largest increase in consumer spending in three years and higher investment in business inventories. The economy ended the year on a high note.

For the first quarter in 2018 do not expect a 3% number, and it could possibly be less than 2%. There has been a pattern in recent years that the first quarter is weak with subsequent quarters gaining strength. It may be due to weather though the numbers are supposed to be smoothed out to adjust for that. It seems the adjustment has not worked in recent years.

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