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Q4 GDP Lowered to 2.2%, Jobless Claims Down to 211K

Mark Vickery
Driven by support from business simplification efforts and lower costs, Barclays' (BCS) Q1 earnings improve.

Thursday, March 28, 2019

This morning, the final look at Q4 2018 GDP has come out, and as expected, results were cooler than the last look: 2.2% growth was recorded in production output for the U.S. during the final three months of the previous calendar year. The previous read said 2.6%.

For the full year, GDP growth just barely held onto its “3-handle” at 3.0% for the year — the first time since 2005 since this has been accomplished. Corporate tax cuts passed by Congress at the end of 2017 has been widely credited with stoking this growth; however, in 2019 most analysts expect this will have largely been burned off.

Most components beneath the headline were down for Q4 — goods spending -0.3%, business investment -0.8%, etc. — though Personal Consumption Expenditures (PCE) quarter over quarter rose 0.1%. This indicates that, while overall growth had indeed been cooling down in Q4, spending was still in positive territory.

Initial Jobless Claims fell by 5000 to 211K last week, from a downwardly revised 216K the previous week which itself was down 5000 claims. This is more good news for the U.S. labor market, which had spent a couple weeks recently above the long-term range of 200-225K, which is consistent with robust domestic employment.

Continuing Claims rose a tad, from 1.74 million two weeks ago to 1.756 million last week — still very healthy in terms of historic long-term unemployment. Keep in mind that a week from tomorrow we’ll get out next look at non-farm payrolls from the federal government, including a new Unemployment Rate, which last month was at a very low 3.8%.

Elsewhere, shares on ride-share company Lyft (LYFT) will be priced after the market close today, with regular day trading to commence tomorrow at its IPO launch. Due to such high interest in the stock — indeed, it’s reportedly been oversubscribed already — shares look to enter the market between $70 and $72 per share. This is expected to raise over $2 billion for the company, which has a current market capitalization of roughly $20 billion.

These are all impressive numbers, and Lyft may enjoy having stole some of Uber’s thunder, the competitor also expected to go public this year. Yet Lyft posted a full-year 2018 loss of $911 million. With lofty valuations out of the gate for this company, analysts will be looking closely for when they see Lyft being able to turn a profit.

Mark Vickery
Senior Editor

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