Survey of Current Business
April 2020
Volume 100, Number 4

GDP and the Economy

Third 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 third estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 With the third estimate, real GDP growth for the fourth quarter was the same as in the second estimate issued last month (see “Updates”). In the third quarter of 2019, real GDP also increased 2.1 percent.

The increase in real GDP in the fourth quarter reflected positive contributions from consumer spending, 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.2 Imports, which are a subtraction in the calculation of GDP, decreased (chart 2 and table 1).

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 consumer spending.

  • The downturn in imports reflected a downturn in imports of goods.
  • The acceleration in government spending primarily reflected an upturn in state and local government investment in structures.
  • The larger decrease in private inventory investment was primarily in nonfarm inventories (mainly reflecting a downturn in retail trade inventory investment).
  • The slowdown in consumer spending primarily reflected a slowdown in durable goods and a downturn in 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 1.4 percent in the fourth quarter, the same increase as in the third quarter (chart 3 and table 2). An upturn in prices for consumer nondurable goods and a pickup in prices for state and local government spending were offset by slowdowns in the prices paid for consumer services and for residential fixed investment.

Food prices turned up, increasing 0.4 percent after decreasing 0.7 percent. Prices for energy goods and services also turned up, increasing 4.7 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.

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

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.

In the third estimate of the fourth quarter, real GDP increased 2.1 percent, the same increase as in the second estimate (table 3, line 1). An upward revision to consumer spending was largely offset by downward revisions to federal government spending and nonresidential fixed investment.

  • Within consumer spending, an upward revision to services was partly offset by a downward revision to goods.
    • Within services, the largest contributors to the upward revision were health care and recreation services.
    • The largest contributor to the downward revision to goods was gasoline.
  • The largest contributor to the downward revision to federal government spending was investment in defense equipment, notably aircraft.
  • Within nonresidential fixed investment, a downward revision to intellectual property products (IPP) was partially offset by an upward revision to structures.
    • Within IPP, a downward revision to research and development was partially offset by an upward revision to software.
    • Within structures, upward revisions to most investment components were largely offset by a downward revision to mining exploration, shafts, and wells.

Measured in current dollars, profits from current production (corporate profits with the inventory valuation (IVA) adjustment and the capital consumption adjustment) increased $53.0 billion, or 2.6 percent at a quarterly rate, in the fourth quarter of 2019 after decreasing $4.7 billion, or 0.2 percent, in the third quarter (table 4). Profits of domestic financial corporations increased $0.7 billion, profits of domestic nonfinancial corporations increased $53.7 billion, and rest-of-the-world profits decreased $1.4 billion.

Profits after tax increased $39.6 billion in the fourth quarter after increasing $11.1 billion in the third quarter.

 

Industry profits (corporate profits by industry with IVA) increased $49.4 billion, or 2.4 percent at a quarterly rate, in the fourth quarter of 2019 after decreasing $6.7 billion, or 0.3 percent, in the third quarter (table 5 and chart 4).

 

 

 


  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.”