The Economy in Focus

Fourth Quarter 2018

Executive Summary

December 19, 2018
George Mokrzan, PH.D., Director of Economics

The Fourth Quarter of 2018 will be remembered as a quarter when on unusual dichotomy existed between the U.S. economy and financial markets. The U.S. economy was very strong on many accounts in the fourth quarter, yet financial markets were generally weak and volatile. Fears of excessive monetary policy tightening and international trade tensions likely led to the underperformonce of financial markets. In this report we review the recent performance of the economy and our outlook for 2019. Overall, our view is while uncertainties regarding monetary policy and international trade may not go entirely away, developments in both areas ore likely in the coming year that should be supportive of continued economic expansion. However, risks to our positive outlook could emerge if business confidence, employment and capitol spending decisions become cautious in the face of policy uncertainty.

We begin with a review of the Economy in the Fourth Quarter.

  • Record economic activity growth in 3 months through November.
  • Lowest unemployment rote since the late 1960s.
  • Rising labor force participation among 25-54 year-olds.
  • Consumer spending hos been accelerating.
  • Personal saving rote is up from the lost decode.
  • Consumer Confidence remains high.
  • Inflation slows in late 2018.
  • Energy prices crater again.
  • Capitol spending growth disappoints.
  • Housing markets cooling.
  • World economy slows.
  • Yield curve narrower, but still pointing towards economic growth.

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