Gross domestic product grew by 2.6% in the final quarter of 2017, the Commerce Department reported last Friday. The fourth-quarter advance in the gross domestic product (the country’s total output of goods and services) followed gains of just above 3 percent in the second and third quarters.
This was largely in part to the drastic increase in consumer spending. Retail holiday had their largest increase this year since 2011, jumping 4.9 percent compared to the same time last year, The Jewish Voice reported recently. Spending overall has increased due to the rising stock market and signs of increasing wages.
The growth was slightly less than the predicted 3% growth for the 4th quarter. One of the factors was imports climbing at double the rate of exports. Government spending increased by 3% as well, contributed largely to hurricane relief efforts.
Consumer confidence was vital to the economic growth seen in 2017, combined with strong optimism among business.
President Trump touted his administration’s economic achievements at his speech in Davos, Switzerland during the World Economic Forum comparing his success to years of “economic stagnation”.
“We continue to forecast 3% economic full growth for the year 2018, Strong domestic momentum will be boosted somewhat by tax cuts, while dollar softness puts the US in a great position to benefit from the global upturn in demand”, James Knightly, chief economist of IGF was reported as stating by The Financial Times.
A 3.8 percent surge in spending by consumers triggered most of the economic growth for the 4th quarter. 70% of all economic activity is made up for consumer spending, The N.Y Post reported.
As the Jewish Voice reported, online shopping was up 18% from last year during the holiday season, electronics and appliances in particular saw a 7.5% increase, the strongest numbers in ten years; home furniture and improvement and jewelry saw 5-6% increase as well.
Business investment in new plants and equipment was very strong, rising at a 6.8 percent rate in the fourth quarter; in addition to spending on home construction which surged at a rate of 11.6 percent after two quarters of declines, The N.Y Post pointed out.
A new report also showed that spending on durable goods increased by 2.9% in December, an increase from 1.7% growth the previous month, The Financial Times indicated.
Trump has said his tax plan will serve as “rocket fuel” for the economy by prompting Americans to spend more and businesses increase investment.
By R. Kotkin