Fourth Quarter U.S. GDP Growth (2.6%) Beats Analysts' Estimates

Nick Kangadis | February 28, 2019
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With all the negative press that the media heaps on President Donald Trump, you’d think the economy would be in shambles. Well, it’s not. And here’s another example of economic growth that outpaced analysts’ expectations.

The 35-day partial government shutdown contributed to the numbers, reported by the Bureau of Economic Analysis (BEA), to be delayed in their release. Fox Business reported that the 2.6 percent GDP growth in the fourth quarter of 2018 beat analysts’ estimates of 2.3 percent, noting that “solid consumer and business spending” led to GDP outperforming estimates. However, the fourth quarter number is a decrease from the 3.3 percent growth seen during the third-quarter of 2018.

According to the BEA:

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, private inventory investment, and federal government spending. Those were partly offset by negative contributions from residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter reflected decelerations in private inventory investment, PCE, and federal government spending and a downturn in state and local government spending. These movements were partly offset by an upturn in exports and an acceleration in nonresidential fixed investment. Imports increased less in the fourth quarter than in the third quarter.

Fox Business did note that the 2.9 percent GDP growth for the entirety of 2018 “narrowly” missed “the Trump administration’s goal of 3 percent growth for the year.” Narrow is an understatement when you take into account the BEA also reported that if you adjust the FY 2018 numbers to reflect the range of including numbers from the fourth quarter of 2017 to the fourth quarter of 2018, the “real GDP increased 3.1 percent,” exceeding the Trump administration’s 3 percent goal.

The 2.9 percent number reflects the increase “from the 2017 annual level to the 2018 annual level," so either number is correct.

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