GDP and the Economy

Third Estimates for the Fourth Quarter of 2019

By Lisa Mataloni  |  Volume 100, Number 4  |  April 22, 2020

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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).

Chart 1. Real GDP: Percent Change from Preceding Quarter

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Chart 2. Real GDP: Contributions to the Percent Change in 2019:IV

[Click chart to expand]

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.
Table 1. Real Gross Domestic Product (GDP) and Related Measures
[Seasonally adjusted at annual rates]
Line   Share of current-dollar GDP
(percent)		 Change from preceding period
(percent)		 Contribution to percent change in real GDP
(percentage points)
2019 2019 2019
IV I II III IV I II III IV
1 Gross domestic product (GDP)1 100.0 3.1 2.0 2.1 2.1 3.1 2.0 2.1 2.1
2 Personal consumption expenditures 68.1 1.1 4.6 3.2 1.8 0.78 3.03 2.12 1.24
3 Goods 21.0 1.5 8.6 5.3 0.6 0.32 1.74 1.09 0.12
4 Durable goods 7.1 0.3 13.0 8.1 2.8 0.02 0.87 0.56 0.20
5 Nondurable goods 13.9 2.2 6.5 3.9 −0.6 0.30 0.87 0.53 −0.08
6 Services 47.1 1.0 2.8 2.2 2.4 0.46 1.29 1.02 1.12
7 Gross private domestic investment 17.0 6.2 −6.3 −1.0 −6.0 1.09 −1.16 −0.17 −1.07
8 Fixed investment 16.9 3.2 −1.4 −0.8 −0.6 0.56 −0.25 −0.14 −0.09
9 Nonresidential 13.2 4.4 −1.0 −2.3 −2.4 0.60 −0.14 −0.31 −0.33
10 Structures 2.8 4.0 −11.1 −9.9 −7.2 0.12 −0.36 −0.30 −0.21
11 Equipment 5.6 −0.1 0.8 −3.8 −4.3 0.00 0.05 −0.22 −0.25
12 Intellectual property products 4.7 10.8 3.6 4.7 2.8 0.48 0.17 0.22 0.13
13 Residential 3.8 −1.0 −3.0 4.6 6.5 −0.04 −0.11 0.17 0.24
14 Change in private inventories 0.1 ...... ...... ...... ...... 0.53 −0.91 −0.03 −0.98
15 Net exports of goods and services −2.7 ...... ...... ...... ...... 0.73 −0.68 −0.14 1.51
16 Exports 11.5 4.1 −5.7 1.0 2.1 0.49 −0.69 0.11 0.24
17 Goods 7.5 4.6 −5.9 2.1 −0.6 0.36 −0.48 0.17 −0.04
18 Services 4.0 3.3 −5.1 −1.3 7.2 0.13 −0.21 −0.05 0.28
19 Imports 14.2 −1.5 0.0 1.8 −8.4 0.23 0.01 −0.26 1.27
20 Goods 11.3 −2.8 0.1 1.1 −11.4 0.36 −0.02 −0.13 1.41
21 Services 2.8 4.5 −0.7 4.8 4.9 −0.13 0.02 −0.13 −0.14
22 Government consumption expenditures and gross investment 17.6 2.9 4.8 1.7 2.5 0.50 0.82 0.30 0.44
23 Federal 6.7 2.2 8.3 3.3 3.4 0.14 0.53 0.22 0.22
24 National defense 4.0 7.7 3.3 2.2 4.4 0.29 0.13 0.09 0.17
25 Nondefense 2.7 −5.4 16.1 5.0 1.9 −0.15 0.40 0.13 0.05
26 State and local 10.9 3.3 2.7 0.7 2.0 0.36 0.29 0.08 0.22
  Addenda:
27 Gross domestic income (GDI)2 ...... 3.2 0.9 1.2 2.6 ...... ...... ...... ......
28 Average of GDP and GDI ...... 3.2 1.4 1.7 2.4 ...... ...... ...... ......
29 Final sales of domestic product ...... 2.6 3.0 2.1 3.1 2.57 2.92 2.13 3.10
30 Goods 29.5 7.3 2.1 4.1 1.7 2.12 0.62 1.20 0.51
31 Services 62.4 1.0 2.7 1.8 2.5 0.66 1.66 1.11 1.51
32 Structures 8.2 3.9 −3.1 −2.5 1.2 0.32 −0.26 −0.21 0.10
33 Motor vehicle output 2.6 −7.6 −7.6 34.7 −26.6 −0.22 −0.21 0.83 −0.85
  1. The GDP estimates under the contribution columns are also percent changes.
  2. GDI is deflated by the implicit price deflator for GDP.

Note. Percent changes are from NIPA tables 1.1.1 and 1.2.1, contributions are from NIPA tables 1.1.2 and 1.2.2, and shares are from NIPA table 1.1.10 or are calculated from NIPA table 1.2.5.

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.

Table 2. Prices for Gross Domestic Purchases
[Percent change at annual rates; based on seasonally adjusted index numbers (2012=100)]
Line   Change from preceding period (percent) Contribution to percent change in gross domestic purchases prices (percentage points)
2019 2019
I II III IV I II III IV
1 Gross domestic purchases1 0.8 2.2 1.4 1.4 0.8 2.2 1.4 1.4
2 Personal consumption expenditures 0.4 2.4 1.5 1.4 0.26 1.57 0.98 0.91
3 Goods −1.6 1.6 −0.8 −0.4 −0.34 0.32 −0.16 −0.08
4 Durable goods −0.3 −1.8 −1.2 −3.2 −0.02 −0.12 −0.09 −0.23
5 Nondurable goods −2.3 3.3 −0.5 1.1 −0.31 0.44 −0.07 0.15
6 Services 1.3 2.8 2.5 2.2 0.60 1.25 1.14 0.98
7 Gross private domestic investment 1.7 2.0 1.1 0.8 0.30 0.35 0.18 0.13
8 Fixed investment 1.8 2.0 1.2 0.8 0.30 0.33 0.19 0.14
9 Nonresidential 1.6 2.0 0.5 0.4 0.20 0.27 0.07 0.06
10 Structures 2.8 4.0 1.6 1.1 0.08 0.11 0.04 0.03
11 Equipment 1.0 0.4 −1.1 0.2 0.06 0.02 −0.06 0.01
12 Intellectual property products 1.5 2.9 2.0 0.2 0.07 0.13 0.09 0.01
13 Residential 2.6 1.7 3.4 2.4 0.09 0.06 0.12 0.09
14 Change in private inventories ...... ...... ...... ...... 0.00 0.02 −0.01 −0.01
15 Government consumption expenditures and gross investment 1.3 1.7 1.6 1.8 0.22 0.29 0.27 0.31
16 Federal 4.6 −2.1 1.5 1.6 0.29 −0.14 0.10 0.10
17 National defense 1.1 1.5 1.4 1.7 0.04 0.06 0.05 0.07
18 Nondefense 10.0 −7.2 1.7 1.4 0.25 −0.19 0.04 0.04
19 State and local −0.6 4.1 1.6 2.0 −0.06 0.43 0.17 0.21
  Addenda:
  Gross domestic purchases:                
20 Food 3.0 0.7 −0.7 0.4 0.14 0.03 −0.03 0.02
21 Energy goods and services −16.7 18.8 −8.0 4.7 −0.49 0.47 −0.22 0.12
22 Excluding food and energy 1.2 1.8 1.8 1.3 1.14 1.71 1.69 1.21
  Personal consumption expenditures:                
23 Food and beverages purchased for off-premises consumption 3.0 0.6 −0.5 0.5 ...... ...... ...... ......
24 Energy goods and services −16.7 18.4 −8.2 4.9 ...... ...... ...... ......
25 Excluding food and energy 1.1 1.9 2.1 1.3 ...... ...... ...... ......
26 Gross domestic product 1.1 2.4 1.8 1.3 ...... ...... ...... ......
27 Exports of goods and services −2.5 3.3 −2.3 −1.6 ...... ...... ...... ......
28 Imports of goods and services −3.5 1.6 −4.0 −0.5 ...... ...... ...... ......
  1. The estimated prices for gross domestic purchases under the contribution columns are also percent changes.

Note. Most percent changes are from NIPA table 1.6.7; percent changes for PCE for food and energy goods and services and for PCE excluding food and energy are from NIPA table 2.3.7. Contributions are from NIPA table 1.6.8. GDP, export, and import prices are from NIPA table 1.1.7.

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.
Table 3. Second and Third Estimates for the Fourth Quarter of 2019
[Seasonally adjusted at annual rates]
Line   Change from preceding period (percent) Contribution to percent change in real GDP (percentage points)
Second estimate Third estimate Third estimate minus second estimate Second estimate Third estimate Third estimate minus second estimate
1 Gross domestic product (GDP)1 2.1 2.1 0.0 2.1 2.1 0.0
2 Personal consumption expenditures 1.7 1.8 0.1 1.17 1.24 0.07
3 Goods 0.7 0.6 −0.1 0.14 0.12 −0.02
4 Durable goods 2.6 2.8 0.2 0.18 0.20 0.02
5 Nondurable goods −0.3 −0.6 −0.3 −0.04 −0.08 −0.04
6 Services 2.2 2.4 0.2 1.03 1.12 0.09
7 Gross private domestic investment −6.0 −6.0 0.0 −1.06 −1.07 −0.01
8 Fixed investment −0.5 −0.6 −0.1 −0.09 −0.09 0.00
9 Nonresidential −2.3 −2.4 −0.1 −0.31 −0.33 −0.02
10 Structures −8.1 −7.2 0.9 −0.24 −0.21 0.03
11 Equipment −4.4 −4.3 0.1 −0.26 −0.25 0.01
12 Intellectual property products 4.0 2.8 −1.2 0.19 0.13 −0.06
13 Residential 6.2 6.5 0.3 0.22 0.24 0.02
14 Change in private inventories ...... ...... ...... −0.98 −0.98 0.00
15 Net exports of goods and services ...... ...... ...... 1.53 1.51 −0.02
16 Exports 2.0 2.1 0.1 0.24 0.24 0.00
17 Goods −0.5 −0.6 −0.1 −0.04 −0.04 0.00
18 Services 7.1 7.2 0.1 0.27 0.28 0.01
19 Imports −8.6 −8.4 0.2 1.29 1.27 −0.02
20 Goods −11.5 −11.4 0.1 1.42 1.41 −0.01
21 Services 4.6 4.9 0.3 −0.13 −0.14 −0.01
22 Government consumption expenditures and gross investment 2.6 2.5 −0.1 0.46 0.44 −0.02
23 Federal 3.8 3.4 −0.4 0.25 0.22 −0.03
24 National defense 5.3 4.4 −0.9 0.21 0.17 −0.04
25 Nondefense 1.7 1.9 0.2 0.05 0.05 0.00
26 State and local 1.9 2.0 0.1 0.21 0.22 0.01
  Addenda:
27 Final sales of domestic product 3.1 3.1 0.0 3.07 3.10 0.03
28 Gross domestic income (GDI) ...... 2.6 ...... ...... ...... ......
29 Average of GDP and GDI ...... 2.4 ...... ...... ...... ......
30 Gross domestic purchases price index 1.4 1.4 0.0 ...... ...... ......
31 GDP price index 1.3 1.3 0.0 ...... ...... ......
  1. The GDP estimates under the contribution columns are also percent changes.

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.

Table 4. Corporate Profits
[Seasonally adjusted]
Line   Billions of dollars (annual rate) Percent change from preceding quarter
(quarterly rate)
Level Change from preceding quarter
2019 2019 2019
IV I II III IV I II III IV
  Current production measures:                  
1 Corporate profits with IVA and CCAdj 2,131.0 −78.7 75.8 −4.7 53.0 −3.8 3.8 −0.2 2.6
2 Domestic industries 1,588.6 −86.0 37.2 −10.3 54.4 −5.4 2.5 −0.7 3.5
3 Financial 405.7 22.2 2.5 −4.7 0.7 5.8 0.6 −1.2 0.2
4 Nonfinancial 1,183.0 −108.2 34.7 −5.5 53.7 −9.0 3.2 −0.5 4.8
5 Rest of the world 542.4 7.3 38.7 5.5 −1.4 1.5 7.7 1.0 −0.3
6 Receipts from the rest of the world 888.0 13.7 25.3 −10.0 3.4 1.6 2.9 −1.1 0.4
7 Less: Payments to the rest of the world 345.7 6.4 −13.4 −15.5 4.8 1.8 −3.6 −4.3 1.4
8 Less: Taxes on corporate income 222.8 −3.0 9.7 −15.9 13.5 −1.4 4.5 −7.0 6.4
9 Equals: Profits after tax 1,908.2 −75.7 66.1 11.1 39.6 −4.1 3.7 0.6 2.1
10 Net dividends 1,352.4 −37.9 22.2 −7.3 12.8 −2.8 1.7 −0.5 1.0
11 Undistributed profits from current production 555.8 −37.8 43.9 18.4 26.7 −7.5 9.4 3.6 5.1
12 Net cash flow with IVA 2,489.3 23.2 72.9 40.0 45.2 1.0 3.1 1.7 1.8
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment

Note. Levels of these and other profits series are shown in NIPA tables 1.12 and 6.16D.

 

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).

Table 5. Corporate Profits by Industry
[Seasonally adjusted]
Line   Billions of dollars (annual rate) Percent change from preceding quarter
(quarterly rate)
Level Change from preceding quarter
2019 2019 2019
IV I II III IV I II III IV
  Industry profits:                  
1 Corporate profits with IVA 2,123.3 −31.4 80.6 −6.7 49.4 −1.5 4.0 −0.3 2.4
2 Domestic industries 1,580.9 −38.7 41.9 −12.2 50.8 −2.5 2.8 −0.8 3.3
3 Financial 417.2 28.1 3.4 −4.6 −0.5 7.2 0.8 −1.1 −0.1
4 Nonfinancial 1,163.7 −66.8 38.5 −7.5 51.3 −5.8 3.6 −0.7 4.6
5 Utilities −2.4 6.6 2.8 −0.6 −0.5 ...... ...... ...... ......
6 Manufacturing 290.6 −42.9 5.4 9.2 15.9 −14.2 2.1 3.5 5.8
7 Wholesale trade 124.4 −6.8 4.5 0.1 3.7 −5.5 3.9 0.1 3.1
8 Retail trade 178.6 21.2 10.3 2.8 14.4 16.3 6.8 1.7 8.7
9 Transportation and warehousing 39.7 −12.5 −3.0 5.3 −3.7 −23.3 −7.4 14.0 −8.5
10 Information 108.3 −2.8 2.9 −33.6 30.3 −2.5 2.7 −30.1 38.9
11 Other nonfinancial 424.5 −29.6 15.6 9.2 −8.8 −6.8 3.8 2.2 −2.0
12 Rest of the world 542.4 7.3 38.7 5.5 −1.4 1.5 7.7 1.0 −0.3
  Addenda:
13 Profits before tax (without IVA and CCAdj) 2,126.5 −31.1 69.4 −39.0 80.6 −1.5 3.4 −1.9 3.9
14 Profits after tax (without IVA and CCAdj) 1,903.8 −28.0 59.7 −23.1 67.1 −1.5 3.3 −1.2 3.7
15 IVA −3.2 −0.3 11.2 32.3 −31.2 ...... ...... ...... ......
16 CCAdj 7.7 −47.4 −4.8 1.9 3.6 ...... ...... ...... ......
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment

Note. Levels of these and other profits series are shown in NIPA tables 1.12, 1.14, 1.15, and 6.16D.

Chart 4. Corporate Profits with Inventory Valuation Adjustment in 2019:IV, Change From Preceding Quarter

[Click chart to expand]

 

 

 

  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.”