Economic Growth Steady But Slow Going Into 2020

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the last three months of 2019, according to the “advance” estimate released by the Bureau of Economic Analysis.

In the third quarter, real GDP increased 2.1 percent. These numbers are consistent with the post-recession trend that has played out in the U.S.

This latest GDP estimate is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the fourth quarter, based on more complete data, will be released on February 27, 2020.

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), 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. Imports, which are a subtraction in the calculation of GDP, decreased.

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

Current dollar GDP increased 3.6 percent, or $191.7 billion, in the fourth quarter to a level of $21.73 trillion. In the third quarter, GDP increased 3.8 percent, or $202.3 billion.

Personal Income Growth Slowed a Bit

Current-dollar personal income increased $148.7 billion in the fourth quarter, compared with an increase of $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.

Disposable personal income increased $127.4 billion, or 3.1 percent, in the fourth quarter, compared with an increase of $179.5 billion, or 4.5 percent, in the third quarter. Real disposable personal income increased 1.5 percent, compared with an increase of 2.9 percent.

Personal saving was $1.29 trillion in the fourth quarter, compared with $1.30 trillion in the third quarter. The personal saving rate — personal saving as a percentage of disposable personal income — was 7.7 percent in the fourth quarter, compared with 7.8 percent in the third quarter.

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