Gross domestic product rose 2.6% during fourth quarter, according to numbers released Friday morning from the Commerce Department. Economists were expecting 3% and the latest reading is significantly less than the third quarter’s 5% growth. Newslook

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00:00 Gross domestic product rose two point 6% during fourth quarter
 00:03 according to numbers released moments ago by the Commerce Department. House
 00:06 we’re expecting a higher 3% this is much less than third
 00:09 quarter 5%. Reaction to announce that bite he bullet chief economist
 00:13 at ICG. To speed certainly. You know not a great reading
 00:17 here but not a terrible one give us your take. Well
 00:20 as a couple things first stop. You know when you look
 00:23 at quarter to quarter numbers is it. Commend this matter volatility
 00:26 just from things like that a lot of defense spending in
 00:29 the third quarter. You weren’t gonna grow another 16% in defense
 00:33 spending in the fourth quarter and that was. Already seemingly negative
 00:37 bias to the quarter when you look at the underlying numbers
 00:40 when you’re looking at it on a year over year basis.
 00:44 Final sales to domestic producers in 2013. Was essentially the same
 00:48 as it was 2012. We are. Reverting and shelling there core
 00:54 rate of growth of around. 2%. Now corporate edit every piece
 00:57 of economic and we’d be remiss if we didn’t talk about
 01:00 the Fed’s rate hike plans. Will this do to these discipline
 01:04 number is making even stronger case that the Fed should delay
 01:07 a rate hike. Well I think they already know that they’ve
 01:10 been delayed until September I don’t I think here there uncertain.
 01:15 As to whether it and do it June or September but
 01:18 I think they’re leaning a little bit more towards September. And
 01:22 I think personally I think they knew this number. Early the
 01:26 preliminary. Guesstimate from commerce on it and you know what they.
 01:32 Saw in this number. I t was telegraphed. In this statement went
 01:38 in this statement they said. It was pointed to world growth
 01:42 as it is solid but the key thing is ended December
 01:46 statement that growth is. In this statement that growth has been.
 01:53 And that hole made that shift promote active president to have
 01:56 a more passive path and our tell me that they’re not
 02:00 really sure what growth is going to be and when you
 02:02 dissect the fourth quarter GDP you know. You know you have
 02:07 been swinging in defense spending all that. You had deflation. Outright
 02:12 deflation in goods. Non durable and durable goods which helped boost
 02:18 the real numbers grow the number of consumption. So when you
 02:21 look underneath it all you see a slowdown. In. In. Investment
 02:27 spending by businesses so it tells you that in the year
 02:32 ahead unique consumers to spend. They need to spend this so
 02:37 called gas tax cut. That’s number one number two you need
 02:42 spending on housing if you don’t get that. It’s going to
 02:46 be very tough to get 3% growth that in this economy.
 02:50 In twenty. Let’s talk about your outlook for 2015 or anything
 02:53 specific you’re looking at we’ve had a great run in the
 02:55 past three quarters. But what are you looking at the rest
 02:58 of the year. For the rest of the year we are
 03:00 looking for is still looking with 3% growth. And we are
 03:03 looking forward on the basis of two things. One we think
 03:07 you’ve gone in yet. A very good spring quarter of war
 03:12 house that house you know of them of houses at home
 03:15 by. Everything in its head out for that as long as
 03:20 consumers don’t los e their competence and based on all the recent
 03:23 surveys it certainly confidence going into the year. So I would
 03:27 expect a good housing you know six months that’s number one
 03:32 number two. The slow down and out in in federal spending
 03:37 and state local government spending. Should reverse and be a positive
 03:41 GDP in 2015. Which will also add in those two things
 03:46 alone. Should get enough growth to get us to a 3%
 03:51 year in 28. Carlos talk about wages the employment cost index
 03:55 was also released this morning at rose point 6% during fourth
 03:59 quarter. Compared to point 7% in third quarter of course wage
 04:03 growth is still out there. No it’s not an ace it’s
 04:06 not a whole host of reasons in one of Willie. Is
 04:10 that we are a global economy. And even though he has.
 04:15 You leave your wage he has a vacant. Do what you
 04:18 do someplace else in the world that naked if if you’re
 04:21 wage got too hot. So even if the actual read an
 04:25 important dreaded doing it overseas. Keeps wage growth lower and what’s
 04:30 happening in the rest of the world. You have lower prices
 04:33 you have slowed growth you have a surplus of labor everywhere
 04:37 in the world. So. Unless you have a very unique skill.
 04:43 Where you probably haven’t seen some decent wage growth over the
 04:46 last several years for the broad. Average of people you don’t
 04:52 and that’s going to keep it the the the same rules
 04:56 of looking at growth and unemployment and what that means who
 05:01 wages. As if we are still within this domestic only container.
 05:07 It is a mistake. Or stiglitz chief economist at ITG thanks
 05:11 for coming back thank you. I’ve got down under watching the