Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the First Quarter of 2018. The excerpt is posted here for the benefit of our blog subscribers.
US Economy Strides into the New Year
Driven by strong consumer spending, fourth quarter GDP expanded at a 2.9% annualized rate, a slight moderation from the third quarter’s brisk 3.2% pace. The US economic expansion will reach 106 months in April, the second-longest on record.
The labor market is strong, with headline unemployment holding steady at 4.1% for the sixth straight month. Wage growth picked up a bit in March, rising 0.3%, as slack in the jobs market is slowly diminishing.
Consumer confidence dipped slightly in March to 127.7 but remains very strong. Respondents remained especially upbeat about labor market conditions.
Home sales struggled to gain traction in the first quarter, limited by rising mortgage rates and home price increases that outpaced wage growth. Greater supply and more take-home pay for buyers could boost sales this spring.
Welcome to the Hot Seat, Jerome Powell
The Fed voted unanimously to hike its Federal Funds Rate by 0.25% in Jerome Powell’s first meeting as Fed Chairman.
Mr. Powell indicated that President Trump’s tariff threats are a concern, but downplayed the near-term risk they pose to the economy.
New forecasts show a pickup in economic growth and lower unemployment in the near-term. Inflation is also projected to increase and surpass the Fed’s target of 2% by 2019. As a result, a growing number of Fed officials are now expecting three additional rate hikes in 2018.
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