American GDP growth in the 4th quarter of 2018 was 2,6% – slightly higher than the 2,4% consensus forecast, but noticeably lower than the third quarter’s 3,4% or the 2nd quarter’s 4,2%. This still gives America an average GDP growth rate of about 3,1% for 2018 – which may not sound like a lot, but given the size of their economy (more than double the second largest economy in the world) it is very significant. It is enough to drag the rest of the world economy out of recession and into growth.
Obviously, this must be seen in the context of Trump’s substantial once-off tax cuts which are probably beginning to wear off now. It must also be seen in the context of the massive monetary policy stimulation of the previous ten years.
All of this is playing out in the stock market as can be seen in the chart of the S&P500 index:
S&P500 Index September 2018 to March 2019 – Chart by ShareFriend Pro (Click to enlarge image)
Here you can see that, following its record closing high of 2930 which occurred on 20th September 2018, the S&P entered a corrective phase. That correction was made worse by Trump when he effectively shut the US government down for five weeks in December. The US shut-down resulted in a “V-bottom” because as soon as investors came back from their year-end holidays they bid the market back up steadily. Read More