The nation’s economy in the fourth quarter grew at its slowest pace since the first three months of 2018 as consumer and business spending pushed real GDP growth to a level of $20.89 trillion, the U.S. Bureau of Labor Analysis reported Thursday (Feb. 28).
According to the BEA’s “initial ” estimate, real U.S. gross domestic product (GDP) in the fourth quarter grew at a rate of 2.6%, down from the revised growth of 3.4% in the third quarter. Despite the lower quarter GDP reading – which measures the value of goods and services produced by the nation’s economy less the value of the goods and services used in production — the U.S. economy is on pace to close out the year at or just below Trump administration’s 3% target for annual GDP growth, depending on possible revisions.
After advancing 2% and 4.2%, respectively, in the first and second quarter, the U.S. economy remained hot through July, August and September in step with Wall Street expectations. Together with GDP growth of 3.4% and 2.6% growth in the third and fourth quarter respectively, U.S. economic output for the year averaged 2.9%, BEA data shows.
In 2017, the nation’s economy grew at an annual rate of only 2.2%. A survey of top U.S. economists had forecasted GDP growth of 3.1% in 2018 and 2.3% GDP growth in 2019, according to the Wall Street Journal Economic Forecast Survey.
Due to the recent partial government shutdown, this initial report for the fourth quarter and annual GDP for 2018 replaces the release of the “advance” estimate originally scheduled for Jan. 30 and the “second” estimate originally scheduled for Feb. 28.
The BEA, which is the economic research group within the U.S. Department of Commerce, emphasized that the fourth-quarter initial estimate is based on source data that are incomplete or subject to further revision by the source agency. Updated estimates for the fourth quarter, based on more complete data, will be released on March 28.
Nationwide, current dollar GDP increased 4.6%, or $233.2 billion, in the fourth quarter to a level of $20.89 trillion. In the third quarter, current-dollar GDP increased by 4.9%, or $246.3 billion.
Current-dollar personal income increased $225.1 billion in the fourth quarter, compared with an increase of $190.6 billion in the third quarter. The acceleration in personal income reflected an upturn in farm proprietors’ income and accelerations in personal dividend income and personal interest income. However, compensation of employees decelerated, BEA officials said.
Disposable personal income increased $218.7 billion, or 5.7%, in the fourth quarter, compared with an increase of $160.9 billion, or 4.2%, in the third quarter. Real disposable personal income increased 4.2%, compared with an increase of 2.6% in the earlier three-month period. Personal savings registered at $1.06 trillion in the fourth quarter, compared with $996.0 billion in the third quarter.