Download US GDP – Fourth Quarter 2016 Third Estimate

U.S. GDP – Fourth Quarter 2016 Third Estimate
The Bureau of Economic Analysis (BEA) real Gross Domestic Product (GDP) third estimate shows
that the U.S. economy expanded 2.1% (annualized) in the fourth quarter of last year – higher than
the second estimate of 1.9%. Personal consumption expenditures (PCE), which account for 70%
of GDP, increased 3.5% – higher than the second estimate (3.0%). Business investment spending
rose 9.5%, marginally higher than the second estimate of 9.2%.
In the fourth quarter, durable and nondurable goods consumption increased 11.4% and 3.3%,
respectively. Fixed residential investment (housing) rose 9.6% following a 4.1% decline in the third
quarter. U.S. exports fell 4.5% and imports rose 9.0%. Government spending increased 0.2%.
Personal income rose 1.5% and personal savings rate was 5.5% in the fourth quarter. After-tax
corporate profits with inventory valuation and capital consumption allowances rose 2.3% in the
fourth quarter – a 15.7% increase from the fourth quarter a year ago, according to the BEA.
Credit Union Impact Meter: Medium
As expected, the second estimate of the fourth quarter GDP based on more complete source
data was revised higher. The third estimate of the fourth quarter GDP underscores continued U.S.
economic expansion, particularly in the household and the business sectors. Both PCE and
business investment spending continue to increase. With the turnaround in corporate profits,
expect business investment spending to remain positive moving forward and to have employment
effects, which will further improve personal income. As unemployment rate continues to decline
and wages further improve, expect PCE to stay upbeat this year. Consumer credit at credit unions
should also stay healthy.
If the double-digit growth rate in durable goods consumption in the third and fourth quarters in
2016 carries over in 2017, it should boost auto lending at credit unions this year. Prior concerns of
weak fixed residential investment spending appear to have abated with the 9.0% increase in the
fourth quarter after two consecutive quarters of declines. Latest year-over-year existing and new
home sales numbers continue to show improvements in the housing market. Healthy mortgage
lending at credit unions could be expected this year and next.
As economic conditions improve demand for loans should also rise. CUNA economists expect
credit union loan growth to reach 10.0% in 2017 and 9.0% in 2018. They anticipate the U.S economy
to grow by 2.3% and 2.5% in 2017 and 2018, respectively. Three Fed funds rate hikes are expected
this year and another three rate hikes next year.
Data Snapshot: Real GDP – Quarterly and 5-Year Periodic Change (%)
Quarterly Change (%)
Real Gross Domestic Product
Personal consumption
Durable goods
Private domestic investment
Residential
2016Q1 2016Q2 2016Q3 2016Q4
0.8
1.6
-0.6
-3.3
1.4
4.3
9.8
-7.9
3.5
3.0
11.6
3
2.1
3.5
11.4
9.4
7.8
-7.7
-4.1
9.6
Exports
-0.7
1.8
10
-4.5
Imports
-0.6
0.2
2.2
9.0
Government expenditures
1.6
-1.7
0.8
0.2
Perc Pineda, Senior Economist
email: [email protected]
March 30, 2017
cuna.org/economics