Argus

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Mar 13, 2026

Market Outlook

Bullish

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Short

Summary

The Bureau of Economic Analysis will provide its second estimate of 4Q GDP this morning. When we review the release, our focus will be on looking ahead, not back, as we assess the resilience of consumer spending and business investment amid oil-supply disruptions that could raise inflation and reduce output. We acknowledge that trying to gauge small changes in prices and output is trivial when a war is impacting millions of lives. According to the advance estimate released in February, 4Q GDP grew at an annualized rate of 1.4%. That was a deceleration from 4.4% growth in the third quarter. Last year's government shutdown played a role, but that is in the past. Looking forward, the data on business investment looks strong and should drive productivity gains. Investment grew 3.8% in 4Q based on the advance estimate. Spending on artificial intelligence continued to be an important driver of growth. Intellectual property products grew 7.4%, helped by software and R&D. Equipment grew 3.2% on top of 5.2%, 8.5%, and 21.4% growth in the prior three quarters, boosted by information-processing equipment. Based on the Atlanta Fed's Nowcast, the near-term prospects for AI investment look strong. Equipment is projected to grow 8.1% in 1Q and intellectual property is projected to be up 5.9%. The data on consumers is less emphatic. Fourth-quarter spending rose 2.4% based on the advance report. That was a slowdown from 3.5% in 3Q. The huge services category was up a solid 3.4% in 4Q and looks fine. The ISM services index showed expansion in January and February. Within goods, durables were

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