Published September 7th, 2018
U.S. gross domestic product (GDP) grew at an annualized rate of 4.2 percent in the second quarter of 2018. The GDP came in 0.1 percentage point ahead of the “advance” estimate (released in July) and almost double the 2.2 percent increase witnessed in the first quarter. This growth represents the strongest economic performance in nearly four years and the highest rate since the third quarter of 2014, when the GDP growth was reported to be 4.9 percent. Government spending rose 2.3 percent, compared to the 1.5 percent increase in the first quarter of this year. Exports increased 9.1 percent, while imports fell 0.4 percent. The Fed forecasts GDP to grow by 2.4 percent in 2019 and by 2 percent in 2020.
Federal Reserve Chairman Jerome Powell stated in comments during the Fed meeting in Jackson Hole, Wyoming, that the U.S. economy is strong and does not appear at “elevated” risk of overheating.
“Many of the most significant challenges facing the U.S. economy – such as slow wage growth and rising government debt – remain outside the powers of the Fed to address,” he added.
U.S. shares increased and the dollar index fell after Mr. Powell’s remarks were published – a sign of diminished concern among investors that the pace of rate increases would suddenly accelerate. Nevertheless, it is expected that the Fed will raise interest rates by 0.25 percent in September.
For the second quarter of 2018 (with 99 percent of the companies in the S&P 500 reporting actual results for the quarter), 80 percent of S&P 500 companies have reported a positive EPS surprise and 72 percent have reported a positive sales surprise.
Earnings growth: For the second […]