A surprise jump in business spending boosted fourth quarter growth to 2.6 percent, but economists say the first quarter could grow at half that pace due to the government shutdown and a sluggish consumer.
div > div.group > p:first-child"> Fourth quarter GDP topped the 2.3 percent expected by economists, due in part to a 6.7 percent increase in equipment spending and a 13.1 percent jump in intellectual property, which includes software. The pickup was a surprise after weak durable goods spending data in the quarter.
"The White House, and fairly so, can claim bragging rights for 2018. The real question is the first quarter. You're well under 2 percent. Are you under 1 percent? We don't know yet," said Joseph LaVorgna, Natixis chief economist for the Americas. The pickup in business spending, therefore is critical, and if it continues, could dispel some doubts that corporations are not using tax proceeds for investment but for things like stock buybacks and dividends. It also suggests there may have been less delayed spending because of uncertainty surrounding trade.
"You're slowing down the run rate, but it's still above the modest potential the economy has. That's the good news. The bad news is it's not enough to grow us out of our deficit problems," Swonk said.
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