GDP Increased 2.1 Percent 4Q 2019

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release on March 26, 2020:

Real gross domestic product (GDP) increased 2.1% in the fourth quarter of 2019, according to the “third” estimate released by the Bureau of Economic Analysis. The growth rate is the same as in the “second” estimate released in February. In the third quarter, real GDP also increased 2.1%.

The GDP estimate is based on more complete source data than were available for the “second” estimate issued last month.  In the second estimate, the increase in real GDP was also 2.1 percent. In the third estimate, an upward revision to personal consumption expenditures (PCE) was largely offset by downward revisions to federal government spending and nonresidential fixed investment.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $53.0 billion in the fourth quarter, in contrast to a decrease of $4.7 billion in the third quarter.

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

Real GDP growth in the fourth quarter was the same as that in the third. In the fourth quarter, a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment and a slowdown in PCE.

Real gross domestic income (GDI) increased 2.6% in the fourth quarter, compared with an increase of 1.2% in the third quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.4% in the fourth quarter, compared with an increase of 1.7% in the third quarter.

Current‑dollar GDP increased 3.5%, or $186.6 billion, in the fourth quarter to a level of $21.73 trillion. In the third quarter, current-dollar GDP increased 3.8%, or $202.2 billion.

The price index for gross domestic purchases increased 1.4% in the fourth quarter, the same increase as in the third quarter. The PCE price index increased 1.4%, compared with an increase of 1.5%. Excluding food and energy prices, the PCE price index increased 1.3%, compared with an increase of 2.1%.

More information on the source data that underlie the estimates is available in the “Key Source Data and Assumptions” file on BEA’s website.

Updates to GDP

In the third estimate, the fourth-quarter growth rate in real GDP was unrevised from the second estimate. PCE, residential investment, and state and local government spending were revised up. These upward revisions were offset by downward revisions to federal government spending and nonresidential fixed investment as well as an upward revision to imports. For more information, see the Technical Note. For information on updates to GDP, see the “Additional Information” section that follows.

GDP for 2019

Real GDP increased 2.3% in 2019 (from the 2018 annual level to the 2019 annual level), compared with an increase of 2.9% in 2018.

The increase in real GDP in 2019 reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, state and local government spending, and private inventory investment that were partly offset by a negative contribution from residential fixed investment. Imports increased.

The deceleration in real GDP in 2019, compared to 2018, primarily reflected decelerations in nonresidential fixed investment, exports, and PCE which were partly offset by accelerations in both state and local and federal government spending. Imports increased less in 2019 than in 2018.

Current-dollar GDP increased 4.1%, or $847.5 billion, in 2019 to a level of $21.43 trillion, compared with an increase of 5.4%, or $1,060.8 billion, in 2018.

Real GDI increased 1.9% in 2019, compared with an increase of 2.5% in 2018.

The price index for gross domestic purchases increased 1.5% in 2019, compared with an increase of 2.4% in 2018. The PCE price index increased 1.4%, compared with an increase of 2.1%. Excluding food and energy prices, the PCE price index increased 1.6%, compared with an increase of 1.9%.

Measured from the fourth quarter of 2018 to the fourth quarter of 2019, real GDP increased 2.3% during the period. That compared with an increase of 2.5% during 2018. Real GDI, as measured from the fourth quarter of 2018 to the fourth quarter of 2019, increased 2.0% during 2019. That compared with an increase of 2.3% during 2018.

The price index for gross domestic purchases, as measured from the fourth quarter of 2018 to the fourth quarter of 2019, increased 1.4% during 2019. That compared with an increase of 2.2% during 2018.  The PCE price index increased 1.4%, compared with an increase of 1.9%. Excluding food and energy, the PCE price index increased 1.6%, compared with an increase of 1.9%.

Corporate Profits, Fourth Quarter and 2019

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $53.0 billion in the fourth quarter, in contrast to a decrease of $4.7 billion in the third quarter.

Profits of domestic financial corporations increased $0.7 billion in the fourth quarter, in contrast to a decrease of $4.7 billion in the third quarter. Profits of domestic nonfinancial corporations increased $53.7 billion, in contrast to a decrease of $5.5 billion. Rest-of-the-world profits decreased $1.4 billion, in contrast to an increase of $5.5 billion. In the fourth quarter, receipts increased $3.4 billion, and payments increased $4.8 billion.

In 2019, profits from current production were unchanged, compared with an increase of $68.7 billion in 2018. Profits of domestic financial corporations increased $7.1 billion, compared with an increase of $11.1 billion. Profits of domestic nonfinancial corporations decreased $36.4 billion, in contrast to an increase of $10.0 billion. Rest-of-the-world profits increased $29.3 billion, compared with an increase of $47.6 billion.

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