January 26, 2018

Solid Economic Growth in 4th Quarter


Key Takeaways

  • Growth in the fourth quarter of 2017 was 2.6 percent. This follows growth of 3.2 percent in the third quarter of 2017 and 3.1 percent in the second quarter of 2017.
  • After the first back to back quarters of more than 3 percent growth, this slight decline is not worrisome. Tax relief was not yet priced into the economy during nearly all of the fourth quarter.
  • Growth over 2017 as a whole was 2.3 percent.

The nation’s economy grew at an inflation-adjusted annual rate of 2.6 percent in the fourth quarter of 2017. This follows growth of 3.2 percent and 3.1 percent in the third and second quarters of 2017. For all of 2017, the economy expanded at a rate of 2.3 percent.

Economic growth, jobs, and investment can be expected to increase in 2018 because of the tax relief law. Two-thirds of Americans report confidence in the economy, the highest in 17 years. Consumer confidence hit a 17-year high in November. CEO confidence is the highest it’s been since 2004.

Changes to GDP Components from Q3 to Q4, 2017

GDP Growth Q4

Personal consumption expenditures grew at 3.8 percent in the fourth quarter. Gross private domestic investment grew at 3.6 percent, and exports grew at 6.9 percent. Imports, a negative impact on GDP, increased by 13.9 percent. Federal government spending grew by 3.5 percent, while state and local government spending grew by 2.6 percent.