Today’s Economic Shakers

GDP growth in Q-4 stays at 1.9% following latest revisions...

The latest revision of the US Gross Domestic Product (GDP) came in at 1.9%, according to this morning’s economic report issued by the Bureau of Economic Analysis.

The numbers matched up exactly with the earlier data, despite expectations that the revisions, a standard part of the Bureau’s analysis process, would show a higher rate of growth in the nation’s economic scorecard.

The revised GDP data stayed at the same rate of growth, 1.9%, as the original January numbers had reported.

Economist expectations for the revised GDP numbers were projected at 2.1%.

The chief culprit in the lower-than-expected GDP was a trade deficit that had grown during the final quarter of 2016.

Beside the trade deficit increase, the government data showed a decrease in both business investment and state government spending, which taken together served to offset the gains seen in the consumer spending category.

The revised data showed that business investment rose slightly for the quarter. However, one key area, purchases of new equipment, increased by only 1.9% as compared to the earlier-reported gain of 3.1%.

The good news for the US economy came in the form of consumer purchases, which saw a bump up from the first GDP data reported last month.

Consumer spending, which is the key economic driver for the US economy, contributing nearly 70% to the nation’s bottom line, saw a gain of 3% during Q-4, up from 2.5%.

An increase in the purchase of big-ticket items such as new autos and trucks helped drive up the consumer spending numbers for Q-4.

The GDP data was apparently not much of a factor in early morning trading, as futures contracts for both the Dow Jones Industrial Average and the S&P 500 index were off just slightly upon release of the government data.

========================================================

Wall Street sees higher chance of Fed rate hike in March…

Investors appear to be taking the Fed more seriously in terms of a possible March rate hike, as the odds of an increase in the central bank’s key interest rate next month has jumped up to even money from 40%.

In her most recent statements, the Federal Reserve Chair Janet Yellen emphasized that the possibility of another rate hike could take place as soon as the next Fed meeting March 14-15.

That reality has seemed to just hit the markets, as futures contracts that bet on the timing of the next rate hike has jumped by 10-points since the end of last week.

The chance of a hike by the Fed is now pegged at 50%.

The higher expectation of a possible interest rate bump was also seen in the 2-year Treasury yield, as the bond, which is sensitive to interest rates, rose five basis points to 1.19% on Monday.

The recent record run of the stock market is certainly a factor in the Fed’s timing of the next rate hike, as some key equity indices have rallied for 12 straight sessions.

What may prove to be a deciding factor that causes the Fed to take swift action is the next jobs report coming from the Labor Department before the March meeting. Should the employment report show a continuation of the recent string of positive numbers, it could clinch the deal for the Fed, in terms of hiking the rate in March.

The wild card in the deck for the Fed may come today in the form of Trump’s speech before a joint session of Congress.

Should the President feature the specific policy measures he intends to enact, the market could get a strong boost, perhaps sealing the deal for the timing of the Fed’s rate decision.

On the other hand, a continuation of general policy intentions, devoid of specifics, could spook the market. In that event, The Fed may be less inclined to move fast as opposed to slow regarding the next rate hike.