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Second estimate keeps GDP at 1.9% growth in Q4

Led by positive contributions from personal consumption expenditures

Real gross domestic product increased in the fourth quarter by an annual rate of 1.9%, according to the second estimate by the U.S. Bureau of Economic Analysis.

This estimate is based on a more complete set of data than was available in the advanced estimate last month, but held steady at 1.9%. This is down significantly from the third quarter’s 3.5% increase.

The increase in personal consumption and expenditures was larger in the second estimate while increases in state and local government spending in nonresidential fixed investment were smaller than the previous estimate.

This chart shows that while the GDP growth in smaller than the previous quarter, it was still up from the first and second quarters last year.

Click to Enlarge


(Source: U.S. Bureau of Economic Analysis)

“Although GDP growth slowed from 3.5% in the third quarter to 1.9% in the fourth, a temporary spike in soybean exports provided a boost to the former and was then a drag on the latter,” Capital Economics Chief Economist Paul Ashworth.

“Without that distortion, GDP growth would have been 2.5% in both quarters,” Ashworth said. “The bigger story is that GDP growth accelerated markedly between the first and second halves of 2016.”

The increase in real GDP is reflective of positive contributions from personal consumption expenditures, private inventory investment, residential fixed investment, nonresidential fixed investment and state and local government spending. However, these were partially offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Here are other updates to the previous estimate:

Current-dollar GDP: Increased by 3.9% or $180.2 billion, up from the previous estimate’s 4%.

Gross domestic purchases price index: Increased by 1.9%, down slightly from the previous estimate’s 2%.

Personal consumption expenditures: Increased by 1.9%, down slightly from last estimate’s 2%.

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