US Q4 GDP weaker than expected as net exports contract sharply - Natixis

Analysts at Natixis present their afterthoughts on the US Q4 2016 GDP report released last Friday, noting that the negative surprise came from a sharp contraction in net exports.

Key Quotes:

“US GDP rose by 1.9% in Q4-16 after 3.5% in Q3-16 (slightly below expectations).”

“This negative surprise is mostly attributable to a bigger than expected contraction of net exports. Consumption rose in line with expectations maintaining a solid trend.”

“Both business and residential investment improved during the quarter.”

“In short, even though today’s report surprised on the downside, the trend in the economy remains largely positive.”

“GDP increased by 1.9% QoQ at annual rate in Q4 2016 in the advance estimate, below expectations (+2.2%) and ours (+2.1%).”

“Real final sales kept increasing at a dynamic pace in Q4: +2.5% QoQ ar (after 2.1% in Q3). Q4 core PCE deflator rose in line with expectations (+1.3% QoQ ar).”