U.S. Economy Expands at Faster Pace Than Estimated

  • U.S. Economy Expands at Faster Pace Than Estimated

The U.S. economy grew faster than previously estimated in the fourth quarter of 2017 due to the upward revision of consumer spending on services and a smaller drag from inventories, the Commerce Department reported on Wednesday.

The economy expanded at a 2.9 percent annualized rate in the quarter, better than the initial estimation of 2.5 percent, while consumer spending during the quarter rose 4 percent, again higher than the 3.8 percent previously reported. Corporate pre-tax profit climbed 2.7 percent in the quarter, down from 5.3 percent recorded in the third quarter.

Growth revision indicates continuous economic growth in the world’s largest economy and validated growing consumer spending despite the uncertainty surrounding economic policy amid rising trade tensions.

Here are the key takeaways:

The surge in corporate profit at the end of the year, together with the newly introduced tax policy will aid business investment and further deepen the ongoing progress in the labor market. Again, rising household spending, which accounts for around 70 percent of the total economy, also is likely to climb higher in coming months on bigger after-tax paychecks.

Therefore, the continuous gain in consumer spending and new investment will help support economic productive even as growth is projected to cool in 2018. However, economic uncertainty remains a concern ahead of two possible additional rate hikes this year.

The U.S. dollar gained 0.71 percent against the Euro following the report. A break of 1.2180 support should open up 1.2006.


About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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