Consumer vs CapEx

This morning’s Q4 GDP report was a headline miss (2.6% versus an expected reading of 3.2%), mostly explained by the inability of strong consumer spending to overcome investment malaise. Bank of America Merrill Lynch’s economists break it down thusly:

Consumer comeback, slower investment

Consumer spending surged 4.3% qoq saar, which was the largest increase since 1Q 2006, and contributed 2.9pp to GDP growth. Goods spending contributed 1.2pp to growth, with durables adding 0.5pp and nondurables adding 0.7pp. Growth in services consumption was a bigger driver, adding 1.7pp. Within services, healthcare spending contributed 0.5pp for the third straight quarter, and was the largest of any major subcategory. This likely reflects the expansion of health insurance coverage from the implementation of the ACA.

The news on the investment side was mixed. There was a significant pickup in inventories to $113.1bn from $82.2, which contributed 0.8pp to GDP growth. However, we think this was largely unintentional and should result in a drawdown in 1Q. Fixed investment growth slowed to 2.3% qoq saar from 7.7% in 3Q, adding only 0.4pp to GDP. The weakness was concentrated in equipment spending which dropped 1.9%—this could be a bit of a payback after strong 11%+ growth in 2Q and 3Q. That said, core capital goods orders continued to contract in December, suggesting further decline heading into 1Q 2015. Residential investment provided a small offset to these data, growing 4.1% qoq saar in 4Q versus 3.3% in the prior quarter.


The consumer stands above it all
Bank of America Merrill Lynch – January 30th 2015

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

What's been said:

Discussions found on the web
  1. tripping at work commented on Feb 15

    tripping at work

    […]we came across a cool site that you may possibly love. Take a look for those who want[…]

  2. gratis inserieren commented on Feb 15

    gratis inserieren

    […]that is the finish of this article. Right here you will find some web pages that we consider you will enjoy, just click the links over[…]

  3. best prostate toy commented on Feb 16

    best prostate toy

    […]Sites of interest we have a link to[…]

  4. nipple play commented on Feb 16

    nipple play

    […]below you will uncover the link to some web-sites that we consider it is best to visit[…]

  5. سیستم cctv commented on Feb 17

    سیستم حفاظتی

    Right now it seems like Movable Sort is the best blogging system out there proper now. (from what I have study) Is that what you are using on your weblog?

  6. خرید دوربین مدار بسته commented on Feb 18

    خرید دوربین مدار بسته

    we choose to honor plenty of other net web-internet sites on the web, even when they arent linked to us, by linking to them. Underneath are some webpages truly well worth checking out