US growth slows after a strong third quarter

CHART OF THE WEEK

Following a 3.5% annualised rise in the third quarter, US GDP slowed to 1.9% in the fourth quarter. Two key shifts explain the slowdown:

  • Consumer spending was slightly slower after two particularly strong quarters;
  • The trade balance pulled growth down, hit by both a fall in exports and a sharp rise in imports.

However, residential and non-residential investment is improving after several quarters of weakness

OUR ANALYSIS

The poor foreign trade figures are likely to be a one-off. Lower exports are mainly correcting an exceptionally strong third quarter driven by a big jump in soybean exports. The higher import numbers reflect renewed inventory accumulation: It is not uncommon for imports to surge when businesses restock.

Looking at the rest of the data, domestic demand is growing at its highest level since the third quarter of 2015 and is set to remain buoyant. Consumer spending should be underpinned by both new job creations and the faster pace of wage rises. The rise in building permits together with non-residential investment indicators suggest that capex will continue to recover.

 

The opinion expressed above is dated January 30th, 2017 and is liable to change.

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.


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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée