Investments

GDP growing, but at slower pace in Q4

Offset by exports and government spending

Real gross domestic product increased in the fourth quarter, however exports and government spending pulled the growth down to a slower pace than the previous quarter.

Real GDP increased at an annual rate of 1.9% in the fourth quarter, according to the advanced estimate released by the Bureau of Economic Analysis. To be fair, this is down from the third quarter’s increase of 3.5%, but the third quarter hit its highest point in three years.

“We would be wary of reading too much into the slowdown in GDP growth from 3.5% annualized in the third quarter to 1.9% in the fourth quarter, because the temporary spike in soybean exports boosted the former and was a drag on the latter,” Capital Economics Chief Economist Paul Ashworth said.

The advanced estimate is based on source data that is incomplete and subject to further revisions. The BEA will release a second estimate later next month.

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gdp

(Source: BEA)

The increase was influenced by positive contributions from personal consumption expenditures, private inventory investment, residential fixed investment and nonresidential fixed investment. However, it was offset by negative contributions from exports and government spending. Imports, which are a subtraction in the calculation of GDP, also increased.

Current-dollar personal income increased to $152 billion in the fourth quarter, compared to the increase of $172.3 billion in the third quarter. The deceleration in the increase is reflective of the deceleration in wages and salaries.

Here is a breakdown of the estimate:

Current-dollar GDP: Increased by 4% or $185.5 billion to $18.86 trillion.

Gross domestic purchases price index: Increased by 2%.

Personal consumption expenditures: Increased by 2%.

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