Wells Fargo Weekly Economic & Financial Commentary, January 31

Shall We Do the Real GDP Shuffle?

· Real GDP posted its second consecutive quarterly above-trend gain in the fourth quarter, rising at a 3.2 annual percent pace.  Much of the gain in the fourth quarter was concentrated in personal consumption and net exports, as concerns over a pullback from the outsized contribution from inventories in the third quarter were diminished.

· As expected, the Fed announced an additional reduction in the pace of its asset purchase program. Softer data in recent months, however, bring into question whether the Fed will announce another round of tapering at the March meeting.

· The housing market is showing signs of weakness, but it is still too early to tell if the sector has hit a genuine speed bump.

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Weekly Economic & Financial Commentary