Recovery becomes more resilient

Our estimate that GDP grew at a decent annualised rate of 3.5% in the fourth quarter even though activity was hit by the Federal government shutdown and the unusually bad weather suggests that the economic recovery has become more robust. The slowdown in jobs growth in December raised concerns that the recovery had stalled once more. But with retail sales growth accelerating, business spending on capital goods rising and housing starts rebounding, weak employment growth increasingly looks like the outlier. GDP growth may not be quite as strong in the first quarter of this year, but the economy appears to be on sounder footing.