Economic Brief Fourth Quarter GDP Report The pace of US GDP growth slowed to 2.6% in the fourth quarter according to the initial estimate from the Commerce Department. This follows a 5% rate in the third quarter, and puts the final 2014 growth rate at 2.5%. Consensus estimates before the release had the Q4 number at 3%. Notably (and somewhat disturbingly), the GDP price index plunged to a 0.0% change for the quarter, and 1.2% YOY. Much of this is energy related, but it no doubt adds to fears of general deflation infecting the US economy in spite of relatively strong trend growth. Parsing the top-line GDP number, personal consumption expenditures ramped up by 4.3%, an increase from the prior rate of 3.2%. Net exports rose 2.8%, a deceleration from Q3’s 4.5% pace. Real final sales of domestic product (which strips out inventory adjustment and net exports) dropped to a 1.8% pace from an increase of 5% in the third quarter. This suggests that there was a slowdown in overall domestic demand. Overall, the growth trend remains healthy, but the inflation data is uncomfortable. Bond prices are up sharply after the release… 10yr up 3/4pts at a 1.66% yield. US GDP Price Index - Quarterly Change: 1994 - Today Financial Strategies Group Jeffrey F Caughron Chief Operating Officer / Managing Director [email protected] (800) 937-2257 Contact Information www.GoBaker.com The Baker Group LP | Headquarters 1601 NW Expressway, 20th Floor Oklahoma City, OK 73118 (800) 937-2257 Austin, TX 1700 Rio Grande, Suite 120 Austin, TX 78701 (888) 480-0301 Birmingham, AL 2204 Lakeshores Drive, Suite 213 Birmingham, AL 35209 (855) 500-4546 Indianapolis, IN 8365 Keystone Crossing, Suite 100 Indianapolis, IN (866) 370-3580 Salt Lake City, UT 2975 West Executive Pkwy, Suite 139 Lehi, UT 84043 (800) 288-9411 Springfield, IL 901 Community Drive Springfield, IL 62703 (888) 333-7704 INTENDED FOR INSTITUTIONAL INVESTORS ONLY. The data provided in these reports is for informational purposes only and is intended solely for your private use. Information herein is believed to be reliable but The Baker Group LP does not guarantee its completeness or accuracy. Opinions constitute our judgment and are subject to change without notice. Past performance is not indicative of future results. The investments and strategies discussed here may not be suitable for all investors; if you have any doubts you should consult your Baker representative. The investments discussed may fluctuate in price or value. Changes in rates of exchange may have an adverse effect on the value of investments. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments. Oklahoma City, OK | Austin, TX | Birmingham, AL | Indianapolis, IN | Salt Lake City, UT | Springfield, IL | www.GoBaker.com The Baker Group | 1601 Northwest Expressway, 20th Floor | Oklahoma City, OK 73118 | 800.937.2257 | Member FINRA and SIPC January 2015 Page 1
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