U.S.: Consumers timid, manufacturing mixed

3 min
Dan North
Dan North Senior Economist for North America


The final estimate of Q4 2018 GDP growth was revised down sharply from +2.6% q/q annualized to +2.2%. For all of 2018, the economy grew +2.9%, tying with 2015 for the fastest year of the recovery. We expect GDP to grow at a slightly cooler pace of +2.5% in 2019. In January, real disposable personal income fell while consumption rose less than expected, to a lukewarm +2.3% y/y. February income rose an estimated +0.2% m/m to a solid +3% y/y, but that’s down substantially from +3.9% in December. Inflation in the report remained tame. Consumers were again absent in February as retail sales fell -0.2% m/m to a tepid +2.2% y/y rate. Core sales fell -0.2% to a soft +2.9% y/y rate. Manufacturing data was mixed. The ISM report was positive, gaining +1.1 points to 55.3, as the new orders component rose +1.9 points to 57.4. But durable goods orders were weak, falling for the first time in five months, losing -1.6% m/m to a +1.8% y/y rate, the slowest in 17 months. Core orders fell
-0.1% m/m to a soft +2.6% y/y pace.