Our economic indicators continue to run positive for the first quarter of 2018. Consumer spending, business investments and residential fixed investments rose at a 4.6% annual rate. Gross Domestic Product (GDP), a broad measure of the nation’s overall economic activity has shown consistent growth over the past three quarters; up 3.2% in 2017’s 3rd quarter, 2.9% in the 4th quarter and 2% in the 1st quarter of 2018.
While the economic news is positive, there is now a concern the economy is potential overheating. The period of easy money has come to an end. The Fed is raising interest rates, albeit slowly. However, there are growing employment pressures which have impelled economists and market watchers to voice concern over the potential for rapid inflation. In addition to this, global trade rhetoric and the risk of political gridlock, have marked the return of stock market volatility.
The Eurozone economy finished 2017 with a bang showing growth at the fastest pace since 2007. Year-over-year, GDP in the region grew at a 2.6% pace with Germany and Italy having picked up the pace. The German economy rose 0.8% on the quarter while France, the 2nd largest economy, and Italy both grew at 0.5% on the quarter and 2.2% annualized. However, the economic machine has throttled back to neutral. The tariff debate and other political concerns are primarily to blame. Whether or not this is a passing condition remains to be seen.