The BEA's preliminary estimate of Q4 US GDP came in at 3.2
per cent, modestly higher than consensus expectations of 3.1 per cent and a
deceleration from Q3's 4.1 per cent growth.
The details of the report were overwhelmingly positive with personal
consumption, exports and business investment all making healthy contributions
to growth. In fact, GDP would have grown by over 4 per cent in the fourth
quarter were it not for a contraction in US government spending. For all of 2013, the US economy grew at a somewhat
disappointing 1.9 per cent rate, though showed significant momentum in the
second half of the year with quarterly growth averaging 3.7 per cent. It is
worth noting that today's release is a preliminary estimate and will be revised
in subsequent months.
Bond markets have thus far shrugged off further Fed tapering
announced at yesterday's US Federal Reserve meeting as well as today's positive
news regarding economic growth. Interest
rates in the US are modestly higher this morning while the yield on 5-year
Government of Canada bonds, the key benchmark rate for 5-year mortgages, have
remained relatively unchanged at less than 1.6 per cent.
Copyright BCREA – reprinted with permission
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