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National Bank of Canada’s analysis team notes that the US economy has ended last year rather well according to the Bureau of Economic Analysis which put Q4 GDP growth at 2.6% and for 2018 as a whole, U.S. GDP grew 2.9%.

Key Quotes

“The acceleration of growth from the prior year came courtesy of fiscal stimulus via stronger contributions from government spending & business investment, the latter buoyed by more favourable rules on depreciation & expensing.”

“Of course, this temporary economic boost does not come free because stimulus measures are causing the budget deficit to widen & government debt to increase, things that will have to be addressed by Congress, probably after the 2020 elections. In contrast to its boost of investment & government spending, stimulus had less of an impact on consumers.”

“The contribution of consumption spending to 2018 GDP growth was not much different from prior years, and that despite a stronger labour market ─ recall that more than 2.6 million net new jobs were created in 2018, topping the prior year’s tally by over half a million.”

“In light of fading fiscal stimulus and production curtailments in the aftermath of last year’s inventory accumulation, we expect U.S. GDP growth to soften to around 2.3% in 2019.”