4Q16 US GDP 1.9%: 'Good enough' for the Fed to hike in March - ING

Rob Carnell, Chief International Economist at ING, notes, "4Q16 US GDP of 1.9% is not a bad figure, when taken together with the unrevised 3.5% growth in 3Q16, and suggests that the US economy picked up momentum in the second half of the year. With few shocks in the data, the main source of interest we think is the business investment figure, which rose by 3.1% (annualised QoQ%), following four quarters of declines." 

Key Quotes
"Recent data, including the core durable goods orders and shipments data released for December, and also small firm business surveys, suggest that investment sentiment has picked up sharply – perhaps a response to the promise of lower taxes and roll back of regulations. And so even if we have to wait longer for government infrastructure spending to emerge, and Congress sanctions less than President Trump would like, the US economy looks to be moving forward at a decent pace under its own steam." 

"Fed hawks will take heart from this data. This is another clue that markets are still too cautious with respect to the timing of the next Fed rate hike. We see few reasons why the Fed should wait until June, and look for a March hike."

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