US Q4 GDP (Second estimate): Unchanged with stronger consumption - Natixis

Thomas Julien, Research Analyst at Natixis, notes that the US GDP was left unchanged at 1.9% QoQ ar in Q4-16 (below expectations) as the upward revision of consumption was offset by a set of small downward revisions in business and residential investment, changes in inventories and government spending.

Key Quotes

“Looking forward, available statistics suggest that GDP is still growing above its potential in early Q1-17.”

“GDP growth was left unchanged at 1.9% QoQ at annual rate in Q4 2016 in the second estimate, lower than expectations (consensus: 2.1% and Natixis: 2.3%). Consumption was revised significantly upward with now higher spending for both durable and nondurable goods and for services. Yet, this was entirely offset by a set of downward revisions in business and residential investment, changes in inventory and government spending. All in all, final sales to private domestic purchasers (an indicator of the underlying trend) rose at a faster pace in Q4: 3.0% after 2.8% QoQ ar in the first estimate.”  

“In short, even though the details of report are mixed, the underlying trend remains solid. Looking forward, job gains and accelerating wages should keep supporting household expenditures. Capex spending will also benefit from the recent rise in oil prices while the construction sector should continue to improve gradually. This week’s ISM should provide an update of the current trend in economic activity.”