Economic Growth

As we mentioned in our last column, this is an important period with regards to economic data and events. Late last week we got the ball rolling with the first estimate of economic growth for the 4th quarter (GDP). For the first three quarters of the year, the economy grew at an approximate rate of 3.0%, which is not bad considering the analysts were expecting a recession in 2023. Even more interesting is that the growth rate accelerated in the third quarter, not only defying predictions of a recession, but also showing few signs of a slowing economy.

The analysts had good reasons to forecast a slowdown in economic growth. After all, the Federal Reserve had jacked up interest rates during 2022 and the first half of 2023. This background served to make the final quarter of 2023 very interesting, and we were not disappointed as the estimate came in at 3.3%, which was stronger than expected. It should be noted that there will be two revisions of this number, but it is not likely that the annual rate of 3.1% for the year will change all that much.

The news will continue with a meeting of the Federal Reserve’s Open Market Committee taking place today and tomorrow. The Fed is expected to hold short-term interest rates steady for the fourth-straight meeting. The markets will be looking for hints of future activity directed by the Fed in their announcement issued after the meeting. The GDP report, as well as the report issued last week on personal spending and accompanying personal consumption expenditures inflation report (PCE) are certain to influence their language. And just to make things more interesting, this Friday we have the January jobs report, which represents the first official data of 2024.