Late post, since I am trying to solve my Twitter dilemma.
The feds announced Thursday morning that US economy grew at a 2.6% rate for the 4th quarter, defying all the recession hawks panicking stocks at the end of 2018.
The growth was a surprise to the upside as doom and gloom Wall Street analysts were looking for 2.0% growth at best. Like some of the news organizations that skew the news to their agenda, if Wall Street was looking for 2% growth, then how could they have been concerned about recession.
The Obama administration would have celebrated 2% growth most quarters during its eight years of economic malaise. As you can see from the market reaction since the dramatic year-end sell off, investors were not buying the news Wall Street was selling.
“The reading adds some reassurance after the near-panic in financial markets in 2018’s closing weeks, as the stock market bottomed on Christmas Eve and has roared back since then,” said Bankrate senior economic analyst Mark Hamrick.
On a year-over-year basis, 2018 GDP rose 3.1%, the highest print since 2005, certainly something President Trump will ballyhoo once he gets back in this hemisphere after cutting short his meeting with North Korean leader Kim Jong Un in Vietnam.
Corporate R&D lead the way with spending soaring 3.5% annualized in Q4, climbing 9.9% over the last year.
Corporate R&D spending now represents 2.3% of US GDP, an all-time record. Rising R&D spending signals increased productivity growth in the near future as new processes are generally aimed at reducing costs on manufacturing or systems services.
“If secular stagnation is a thing, US firms are fighting like hell to avoid it,” according to Renaissance Macro’s Neil Dutta latest note.