Though inflation will accelerate this year, some of that will be transitory.

Ryan Sweet

It will be a solid GDP number, it’s one small milestone in many that we have to hit before we can say we have fully recovered from the recession.

The widening in the goods deficit suggests that trade will be a drag on first-quarter GDP, this won’t be a big issue, as other parts of the economy are still doing well, such as business investment in equipment and consumer spending.

It is hard to fathom how partially rolling back the Trump cuts to pay for the infrastructure plan will meaningfully impede business investment, there is little relationship between the effective corporate tax rate and changes in real business equipment spending. Most U.S. corporations have no trouble getting cheap capital and they pay among the lowest effective tax rates in the world.

Rising material prices, including lumber, are beginning to weigh on builder confidence and reduce housing affordability.

Manufacturing is clearly weathering this wave of confirmed COVID-19 cases better than occurred earlier this year, manufacturers are busy, as there is a need to rebuild inventories and demand for consumer goods remains strong, for now.

Job growth has been decelerating, since the easy part of the recovery in the labor market, recalling workers, has mostly run its course, surging COVID-19 cases and tighter restrictions to contain the spread of the virus were a heavy weight on the job market in December.

U.S. manufacturing should fare reasonably well this winter as businesses need to restock inventories and the shift in consumer spending away from services to goods helps manufacturers.

The Thanksgiving holiday can cause issues with the seasonal adjustment process, jobless claims continue to signal a struggling labor market recovery.

Given that profits are likely now declining, financial market conditions have tightened and the economy is contracting, business investment will take it on the chin, business investment in equipment will drop sharply in the second quarter.

Inflationary pressures are not an issue, this supports the Fed's strong signal that if its expectations hold, monetary easing will not continue in 2020 and rate hikes are even more unlikely.