JP Morgan's weekly update offers investors an at-a-glance summary of economic news and reports.This week's update looks at:
• Economic growth
• Corporate profits
• Employment
• Changes at The Fed
Read an excerpt from this week's update below, or download JP Morgan's complete economic commentary.
In Brief:
- Growth: Economic growth was adjusted one-tenth of a percentage lower to 2.5% q/q in the fourth quarter according to the second estimate. Consumer spending was unchanged at a healthy 3.8%. Residential investment was adjusted higher to 13.1% from 11.6%, while slowing inventory build and nonresidential investment dragged on growth. We expect economic growth to pick up in the first half of 2018, supported by fiscal stimulus, before a second-half slowdown.
- Profits: With 485 companies having reported (98.8% of market cap), our current estimate for 4Q17 is $33.86 ($28.15 exfinancials). This represents a 21.4% y/y growth rate, with strength in energy, materials, technology and industrials, while telecom and real estate have struggled. So far 75% of companies have beat on earnings and 67% have beat on revenue. 2018 earnings estimates have risen from $149.70 to $158.00 since the beginning of the quarter. Although analyst estimates have historically been optimistic, strong economic fundamentals and the impact of tax reform should support double-digit earnings growth this year.
- Jobs: The February employment report was extremely strong, with payroll gains of 313,000 almost 100,000 higher than the consensus estimate. In addition, the prior two months were revised upward by 54,000. The unemployment rate stayed flat at 4.1% despite strong payroll gains thanks to a surge in the participation rate, up to 63.0%. Wage growth increased 2.5% y/y for production and non-supervisory workers, faster than last month, and total private wage growth figures were revised down for January and healthy at 2.6% y/y for February. Last month's report confirms that the labor market continues to tighten, a reality that will likely limit U.S. economic growth past 2019.
Read additional insights about interest rates, inflation, and potential risks for investors by downloading the complete commentary from JP Morgan. Or, read insights regarding the current state of affairs for the U.S. Economy.
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