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The economy grew to $29.7 trillion in Q4, or $23.5 trillion when adjusted for inflation (real GDP), according to the 3rd and final revision.

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This represents a compounded annual growth rate of 2.4% in Q4, a modest increase from the 2.3% growth from the second revision. But below the 3.1% and 3.2% pace of growth from Q3 and Q4 2023 respectively.

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The economy is 2.5% higher over the last 12 months. But the pace of growth has slowed from the 3.0% growth rate over the last few quarters.

The historical average real GDP growth rate for both Q/Q and Y/Y is 3.2%. Which means the economy has been growing below average by both metrics for the 4th straight quarter.

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Breaking down the numbers by category, we see that consumer spending actual grew at a faster pace in Q4, contributing 2.7% to GDP (an increase from 2.5% in Q3 and the highest since Q1 2023).

Government spending added 0.6% to GDP (roughly 25%), while inventory and business (nonresidential) investments subtracted 1.2%.

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Along with the 3rd and final estimate for GDP, we got an update on corporate profits. Profits increased to $4 trillion in Q4, a gain of 5.4% for the quarter and 7% for the year. The largest quarterly gain since Q2 2022.

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Unfortunately much of this is old news by now, since a lot has changed since then. Q1 GDP estimates are still negative (although if adjust the gold imports it nets to +0.2%), with consumer spending growth falling to 0.3% (down from +4.0% in Q4).

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The February trade deficit in goods came in at -$147.9 billion. Which means net exports continue to look like they will be a major drag on Q1 GDP growth.

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I will continue to give the market the benefit of the doubt as long as last week’s low holds. But so far we failed the first attempt at the resistance level I pointed out in Sunday’s “surveying the week ahead” (blue dotted line on chart above).

Between tariffs (which could significantly impact supply chains and growth in the short term), a slowdown in consumer spending, a slowdown in government spending, and along with high valuations, is some serious potential hurdles to consider in the short term.

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10 year treasury rates look to be retesting the 4.40% level after finding support at the December low around 4.12%.

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While the USD has seemed to find support around the November 5th (election day) gap at $103.451. From a technical perspective, there doesn’t appear to be much in the way to stop a retest of the $105.42 level above. But the administration would like a weaker currency to be more competitive (attractive) to the rest of the world. And that is something I wouldn’t bet against.

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On a positive note, weekly unemployment claims remain low despite the challenger data and speculation about job losses.

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Same thing with continuing unemployment claims. So far no signs of anything out of the ordinary.

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