Based on incomplete data, the BEA reports the Initial Estimate of 4th-Quarter GDP at 2.6%.
Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2018, according to the “initial” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4 percent.
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 January 30th and the “second” estimate originally scheduled for February 28th.
The Bureau emphasized that the fourth-quarter initial estimate released today 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, 2019.
The Econoday consensus was 2.2% in a range of 1.7% to 2.8%.
Minor Shutdown Impact
BEA estimates the impact of these reductions in services provided by the federal government subtracted about 0.1 percentage point from real GDP growth in the fourth quarter.
Prices
The GDP price index deflator was 1.8 percent, the same as for the third quarter.
The price index for gross domestic purchases, measures the prices of goods and services purchased by U.S. residents, regardless of where the goods and services are produced. In the fourth quarter, this index increased 1.6 percent, compared with a 1.8 percent increase in the third. Excluding food and energy, gross domestic purchases prices increased 1.8 percent, the same increase as in the third.
The PCE price index increased 1.5 percent in the fourth quarter, following an increase of 1.6 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent after increasing 1.6 percent.
Wildfires
The BEA notes that It is not possible to estimate the overall impact of the California wildfires on GDP.
It also says the destruction of fixed assets, such as residential and nonresidential structures, does not directly affect GDP or personal income.
Contributions to GDP
- Personal Consumption Expenditures PCE contributed 1.92 percentage points (Goods 0.80 and Services 1.11). Some data is missing for services.
- Gross Private Domestic contributed 0.82 PP.
- Change in Private Inventories contributed 0.13 PP
- Net Exports subtracted 0.22 PP.
In light of the collapse in consumer spending in December and the slowdown in housing, some of these numbers seem questionable.
Yet, the BEA notes that it had three months of data for consumer spending on goods; shipments of capital equipment; motor vehicle sales and inventories; durable and nondurable goods manufacturing inventories; wholesale and retail trade inventories; exports and imports of goods.
Services, which contributed 1.11 percentage points to GDP, are a likely source of revisions.The BEA notes quarterly data on revenue and expenses for services industries were not available.
The BEA used 1.8% as its measure of inflation. If you believe that is on the low side, the then GDP estimate is on the high side.
Mike “Mish” Shedlock
Its surprising that employment has been as strong as it has been over the past 8 years especially where GDP less than 3% every year except for 2018. (even less than 2% for 2 years between 2011 & 2015)
It used to be that you needed 2% GDP just for employment to keep up with working age population and to keep the unemployment rate from rising.
The unemployment rate is under 4% and job growth is best on record despite such low GDP growth, however consumer spending and business investment has been white hot since 2010.
Everywhere from white collar corporate six figure jobs to blue collar tradesmen employers are complaining that they just cannot find people and they get no responses to ads posted on Indeed.com etc..
The demand for labor is increasingly specialized. You can’t hire someone off the street and put them into an entry level position because there just aren’t as many entry level positions out there. And because of the monopsony status of many employers if you have a job it is increasingly difficult to transfer to another unless you’re willing to relocate.
While the physical work might be similar or the same across firms, the software and company structures are demanding more unique training, to the point where many tasks are not able to be completed without access to many different software tools, which may or may not be available to everyone. That training on one system might not easily transfer over to another company even if they’re in a similar business. This can also have the effect of employees not being able to see the forest for the trees, and is another reason why front line employees often need to contact managers for overrides and approvals for everything. So even if a new position opens up within the same company it might be difficult to fill with internal candidates because no single employee will be qualified.
They’re gonna be forced to raise the dept limit by at least 4 trillion just to get through next election,that means trump will have racked up as much red ink in 4 years as barry did in 8 to drive that pathetic gdp print.
The Chicago Purchasing Managers Index (PMI) just blew the estimates out of the water; highest in 2 years at 64.7. Looks like we’ll have to wait a bit longer for the next recession. As for the GDP, those numbers are ALWAYS getting revised.
Pricing pressure is building due to supply constraints. Higher prices are absolutely being passed to the consumer due to White hot demand for most consumer items