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By HaleStewart December 24, 2017 7:50 am
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US Economic Week in Review: The Economy Ends the Year on a Strong Note

            The BEA released their last GDP estimate of the US economy earlier this week.  The report showed that the economy is doing very well.  On a Y/Y basis, topline growth was 2.3%, which continues the quarterly increase in this number.

            Individual components were also very strong.  Personal consumption expenditures – which comprise 70% of total US spending – ended the year on solid ground:

Total consumer spending was slightly above $10.4 trillion at the end of 2012.  It has since risen to a little more than $12 trillion at the end of 2017.  The Y/Y percentage change has been consistent.

Durable goods spending is perhaps the most impressive number.  Spending in this category was just below $1.3 trillion in 2012.  It has since risen to approximately $1.75 billion in 2017, which represents a solid 5%-7.5% Y/Y rate of growth.

Non-durable goods spending stalled between the 2H14-1H16.  But it has since risen from ~$2.68 trillion to ~$2.88 trillion, which represents a 2.5%-5% Y/Y growth rate.

Finally, spending on services has risen from $7.45 trillion in late 2012 to a bit more than $9.2 trillion at the end of 2017.  This is a consistent 4%-5% growth rate for the 2016-2017 time period.

            Investment is also picking up:

Top line investment growth declined in 2H15 thanks to the oil market contraction.  But it has returned to a growth, largely thanks to business investment:

The top chart shows total equipment, which tracks with the contraction in the oil market.  The bottom chart shows industrial equipment, which started to increase in the 1Q16 and has since risen to its highest Y/Y pace in the last five years.

            When this data is combined with data from the coincident indicators (see last week’s column), it shows an economy that has ended the year on a high note.

n 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

            

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