Survey of Current Business

Chronicling 100 Years of the U.S. Economy

February 2020
Volume 100, Number 2

GDP and the Economy

Advance Estimates for the Fourth Quarter of 2019

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Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2019, according to the “advance” estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 In the third quarter, real GDP also increased 2.1 percent. The increase in real GDP in the fourth quarter reflected positive contributions from consumer spending, federal government spending, state and local government spending, residential fixed investment, and exports, that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment.2 Imports, which are a subtraction in the calculation of GDP, decreased (chart 2).

In 2019 (from the 2018 annual level to the 2019 annual level), real GDP increased 2.3 percent after increasing 2.9 percent in 2018 (see “Real GDP, 2019”).

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

  • The downturn in imports reflected a downturn in imports of goods (mainly durable goods).
  • The acceleration in state and local government spending reflected an upturn in investment in structures.
  • The smaller decrease in nonresidential fixed investment reflected an acceleration in intellectual property products and a smaller decrease in equipment (mainly due to an upturn transportation equipment).
  • The larger decrease in private inventory investment was primarily in nonfarm inventories (mainly retail trade).
  • The slowdown in consumer spending primarily reflected slowdowns in both durable and nondurable goods.
    • The leading contributor to the slowdown in spending on durable goods was a slowdown in recreational goods and vehicles.
    • The slowdown in spending on nondurable goods reflected downturns in “other” nondurable goods (led by a slowdown in prescription drugs) and in food and beverages purchased for off-premises consumption.

Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 1.5 percent in the fourth quarter after increasing 1.4 percent in the third quarter (table 2 and chart 3). The slight acceleration reflected an upturn in prices for consumer goods, and price accelerations for state and local government spending, and federal defense spending that were mostly offset by a deceleration in the prices paid for consumer services and a downturn for nonresidential fixed investment (mainly a price deceleration for intellectual property products).

Food prices turned up, increasing 0.5 percent after decreasing 0.7 percent. Prices for energy goods and services also turned up, increasing 8.5 percent in the fourth quarter after decreasing 8.0 percent in the third quarter. Gross domestic purchases prices excluding food and energy slowed, increasing 1.3 percent in the fourth quarter after increasing 1.8 percent in the third quarter.

Consumer prices excluding food and energy, a measure of the “core” rate of inflation, decelerated, increasing 1.3 percent in the fourth quarter after increasing 2.1 percent in the third quarter.

Chart 3. Prices for Gross Domestic Purchases

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Personal income (table 3), which is measured in current dollars, increased $148.7 billion in the fourth quarter after increasing $162.6 billion in the third quarter. The smaller increase reflected decelerations in proprietors’ income, personal current transfer receipts, and personal dividend income that were partly offset by a smaller decrease in personal interest income and an acceleration in compensation.

Personal current taxes increased $21.2 billion in the fourth quarter after decreasing $16.9 billion in the third quarter.

Disposable personal income (DPI) increased $127.4 billion in the fourth quarter after increasing $179.5 billion in the third quarter.

The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 7.7 percent in the fourth quarter; in the third quarter, the personal saving rate was 7.8 percent.

Real DPI (chart 5) increased 1.5 percent in the fourth quarter after increasing 2.9 percent in the third quarter. Current-dollar DPI increased 3.1 percent after increasing 4.5 percent.

Real GDP increased 2.3 percent in 2019 (from the 2018 annual level to the 2019 annual level), compared with an increase of 2.9 percent in 2018 (table 4). The increase in real GDP in 2019 primarily reflected positive contributions from consumer spending, nonresidential fixed investment, federal government spending, state and local government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment. Imports increased, contributing negatively to the 2019 change in real GDP (chart 6).

Chart 6. title

[Click chart to expand]

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

 


  1. “Real” estimates are in chained (2012) dollars, and price indexes are chain-type measures. Each GDP estimate for a quarter (advance, second, and third) incorporates increasingly comprehensive and improved source data; for more information, see “The Revisions to GDP, GDI, and Their Major Components” in the January 2018 Survey of Current Business. Quarterly estimates are expressed at seasonally adjusted annual rates, which reflect a rate of activity for a quarter as if it were maintained for a year.
  2. In this article, “consumer spending” refers to “personal consumption expenditures,” “inventory investment” refers to “change in private inventories,” and “government spending” refers to “government consumption expenditures and gross investment.”