Final 4Q GDP Improves–a Little
The Bureau of Economic Analysis’ final estimate of fourth quarter gross domestic product on Friday showed growth continued to slow from the third quarter, but not as much as previously estimated.
BEA said real gross domestic product increased at an annual rate of 1.4 percent in the fourth quarter, lower than the final third quarter estimate (2.0 percent) but higher than earlier fourth quarter estimates based on less complete data (0.7 percent).
The report noted the increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures, residential fixed investment and federal government spending that were partly offset by negative contributions from nonresidential fixed investment, exports, private inventory investment and state and local government spending. Imports, a subtraction in the calculation of GDP, decreased.
BEA said deceleration in real GDP in the fourth quarter primarily reflected downturns in nonresidential fixed investment and in state and local government spending, a deceleration in PCE and a downturn in exports that were partly offset by a smaller decrease in private inventory investment, a downturn in imports and an acceleration in federal government spending.
The report said real gross domestic income, which measures the value of production of goods and services in the United States as the costs incurred and the incomes earned in production, increased by 0.9 percent in the fourth quarter, compared to an increase of 2.0 percent in the third. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 1.1 percent in the fourth quarter, compared to an increase of 2.0 percent in the third.
“Upward revisions to the services component of personal consumption and a smaller drag from trade were largely responsible for the improvement, while inventory investment was a slightly larger drag than previously reported,” said Wells Fargo Securities, Charlotte, N.C. “Another solid gain in personal consumption services is encouraging and highlights the strength of the domestic economy.”
