Econowatch

  The U.S. economy may be on a wait and see stance while the new administration gets its act together in Washington.
   How this changes could very well depend on what the president says this evening in his speech to Congress. Recently, he has called for a $54 billion increase in defense spending, to be covered by sharp cuts in other government expenditures.
   A big increase in defense spending would boost total output of goods and services, but without more revenue, such a policy would increase the government deficit as well as the national debt.
   This could also lead to more inflation. Coupled with continued flat wage growth, the average worker would be worse off, as prices rises but income remains the same.
   And as defense spending rises sharply, suppliers of munitions would benefit from the additional business.
   All in all, it's reminiscent of the script of George Bernard Shaw's play, "Major Barbara."
   Gross Domestic Product (GDP). the standard index of output used to measure national economic health, posted a 1.9 percent growth rate in the fourth quarter of 2016, the same as an earlier estimate posted several weeks ago. That, however, is down from the 3.5 percent final number for the third quarter of last year.
   The Commerce Department announcement said "the general picture of economic growth remains the same," even as personal consumption spending notched a larger increase, but state and local government spending grew more slowly. In addition, there were fewer exports and a rise in imports, as well as a downturn in federal government spending.
   Taken together, the various elements counter-balanced each other, resulting in what can be described as a pause in the GDP growth rate.
   Separately, the Bureau of Labor Statistics said unemployment rates for all of 2016 faded in 38 states and the District of Columbia, rose in just nine states and held steady in three states. Nationwide, the unemployment rate has been below 5 percent for several months.