The 2014 fourth quarter US GDP report came in slightly lower than analysts had expected, but there was one piece of very exciting news.
One of the brightest highlights of the report was a big and broad based jump in real personal consumption expenditures at a 4.6% annualized growth rate, the strongest level we’ve seen since 2006. This is huge because consumption accounts for about 68% of the US economy.
That growth in the headline real PCE number is based on strong growth in consumption of both goods and services. Goods had a 5.4% growth rate, and services grew at 3.7%. Both of those rates were quite a bit stronger than the average growth rates for goods and services over the last two years.
This was the strongest real PCE growth rate since before the Great Recession.
Even better, the January University of Michigan consumer sentiment report confirmed that Americans are feeling good ins Q1 2015.
“Consumers are loving life,” BNP Paribas’ Bricklin Dwyer said. “The level of consumer sentiment, both the University of Michigan and Conference board measures support our view that consumer spending will kick the year off on a robust foot after the drop in energy prices left consumers’ wallets full. “
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