The world’s largest economy slowed in the final quarter of last year, bringing US GDP expansion for the year below US President Donald Trump’s ambitious 3 percent target, according to data released on Friday.
The slowdown underscored the difficulty the administration faces in making good on an emblematic pledge.
The White House believes the massive tax cuts passed last month would energize the economy and offset the US$1.5 trillion cost of the tax overhaul, but economists say this is not likely and any growth bump would be modest.
After two quarters of expansion above 3 percent, GDP slowed to 2.6 percent in the October-to-December period, held down by a big jump in imports and falling business inventories, according to the US Department of Commerce’s first growth estimate.
That was slower than analysts forecast and meant growth for the year was 2.3 percent, better than the 1.5 percent gain in 2016, but well below 2015’s 2.9 percent.
However, the result is subject to revision as more data become available.
Analysts highlighted the positive signs within the report, including strong spending and investment, but cautioned that growth in the first quarter of this year could be below the trend, as in recent years.
“In short, growth was a bit less than generally expected, disappointing hopes for a third consecutive 3 percent-or-better quarter for the first time since 2005, but the details were stronger than the headline figure,” Jim O’Sullivan of High Frequency Economics said in a research note.
The GDP data showed growth in the fourth quarter was bolstered by consumer spending, home buying and business investments.
Exports also had a good quarter as the US dollar continued to weaken, gaining 12.6 percent compared to the previous quarter, the largest jump in four years.
However, imports, which subtract from GDP, rose an even faster 13.9 percent, the largest quarterly increase in more than seven years.
Durable goods orders were another bright spot for the quarter, with sales of large, factory-made items rising by 8.2 percent, the biggest quarterly gain in 14 years.
“Given the strongest business confidence in decades and expectations of still stronger tax-cut fueled growth to come, companies are almost certain to kick production up a notch in 2018,” Chris Low of FTN Financial said in a client note.
On Wall Street, investors shrugged off the somewhat disappointing GDP and all three major indices surging to record closes, pushed by solid corporate earnings reports.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
SEASONAL WEAKNESS: The combined revenue of the top 10 foundries fell 5.4%, but rush orders and China’s subsidies partially offset slowing demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) further solidified its dominance in the global wafer foundry business in the first quarter of this year, remaining far ahead of its closest rival, Samsung Electronics Co, TrendForce Corp (集邦科技) said yesterday. TSMC posted US$25.52 billion in sales in the January-to-March period, down 5 percent from the previous quarter, but its market share rose from 67.1 percent the previous quarter to 67.6 percent, TrendForce said in a report. While smartphone-related wafer shipments declined in the first quarter due to seasonal factors, solid demand for artificial intelligence (AI) and high-performance computing (HPC) devices and urgent TV-related orders
Prices of gasoline and diesel products at domestic fuel stations are this week to rise NT$0.2 and NT$0.3 per liter respectively, after international crude oil prices increased last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week snapped a two-week losing streak as the geopolitical situation between Russia and Ukraine turned increasingly tense, CPC said in a statement. News that some oil production facilities in Alberta, Canada, were shut down due to wildfires and that US-Iran nuclear talks made no progress also helped push oil prices to a significant weekly gain, Formosa said
MINERAL DIPLOMACY: The Chinese commerce ministry said it approved applications for the export of rare earths in a move that could help ease US-China trade tensions Chinese Vice Premier He Lifeng (何立峰) is today to meet a US delegation for talks in the UK, Beijing announced on Saturday amid a fragile truce in the trade dispute between the two powers. He is to visit the UK from yesterday to Friday at the invitation of the British government, the Chinese Ministry of Foreign Affairs said in a statement. He and US representatives are to cochair the first meeting of the US-China economic and trade consultation mechanism, it said. US President Donald Trump on Friday announced that a new round of trade talks with China would start in London beginning today,
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