On Wednesday 28th February 2018, the United States (US) Bureau of Economic Analysis (BEA) will publish preliminary data regarding the US Gross Domestic Product (GDP) growth rate in the fourth quarter (Q4) of 2017. The analysts’ consensus is that the US GDP grew by 2.5% in the fourth quarter of 2017, on an annualized basis.
On the 26th January 2018, the BEA had released a first-estimate report which had shown that the US GDP had grown 2.6% in the last quarter of 2017. The GDP Q4 figure was considerably lower than the third quarter’s reading which came in at 3.2%. According to the BEA “the deceleration in real GDP growth in the fourth quarter of 2017 reflected a downturn in private inventory investment that was partly offset by accelerations in Personal Consumption Expenditures (PCE), exports and an upturn in residential fixed investment.”
Federal Open Market Committee confident in economic outlook
The Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) is confident in the US economic outlook. This was revealed after the release of the FOMC’s 30th January 2018 meeting minutes. According to the FOMC’s minutes, “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate.”
Randal Quarles, the Vice-Chairman of the Federal Reserve, delivered a speech on 22nd February 2018 at a symposium dedicated to monetary policy in Tokyo. Randal Quarles said that “I believe that a further gradual increase in interest rates will be appropriate for maintaining the health of the labour market and stabilizing US inflation near the target level of 2%.” Market analysts are trying to determine whether the expression “further gradual increase” means a faster pace of benchmark interest rate hikes or that the Federal Reserve will continue increasing rates according to its current plan. In its 13th December 2017 meeting, the Federal Reserve governing board signaled its intention to raise borrowing costs three times during 2018 and two times more in 2019.
Analysts disagree over 2018 US GDP growth
A J.P. Morgan report, released on 14th February 2018, revealed that the bank slashed its expectations regarding the US economic growth in the first quarter of 2018. J.P. Morgan’s economists wrote that “while it’s still early going, we are taking down our outlook for first quarter 2018 Gross Domestic Product from 3% to 2.5%. the inflation reading should probably cement in place the Federal Reserve’s intent to hike interest rates at the March 2018 FOMC meeting.”
However, Kevin Hassett, the chairman of the Council of Economic Advisors and one of the top advisors to US President Donald Trump doesn’t share the same opinion with J.P. Morgan analysts. Hassett told CNBC (Consumer News and Business Channel) reporters on Wednesday 21st February 2018 that “the US economy is not in a new normal of low economic growth, but we are just in a normal period again where we can go back to growing about 3% that we always expected.” Hassett noted that the tax cut plan approved on December 2017 will add an extra $2 trillion to the US GDP in the next ten years.
STO and US GDP data
In general, a better than expected US GDP growth figure could make the US Dollar strengthen. On the contrary, a lower than expected figure could weaken the US Dollar. STO enables its clients to trade on the most active shares in global markets. STO provides traders with advanced trading tools which can help them shape a beneficial trading strategy.
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