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After a 3.4% rise in the third quarter, the nation’s economy grew at a slower pace in the fourth quarter of 2018.
According to the “initial” estimate1 released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.6% in the fourth quarter of 2018, slower than the previous two quarters. It is the 19th consecutive quarter of growth, as shown in Figure 1.
Over the year of 2018, U.S. GDP rose 2.9%, after the increase of 2.2% in 2017. Despite the recent slowdown, it was one of the fastest annual growth rates since the Great Recession, while the other 2.9% growth occurred in 2015.
The increase in real GDP in the fourth quarter was contributed by increases in gross private domestic investment, personal consumption expenditures (PCE), which, alone, accounts for about 70 percent of the overall economy, federal government spending and exports. Meanwhile, increases in imports in the fourth quarter had negative contribution to economic growth.
The deceleration in economic growth in the fourth quarter reflected slowing in PCE, private domestic investment, and government spending. Residential fixed investment fell 3.5%, while state and local government spending decreased 0.3% in the fourth quarter. Net exports subtracted 0.22 percentage point from GDP growth in the fourth quarter as imports increased 2.7%, surpassing the increase of 1.6% in exports.
The price index for GDP increased 1.8% in the fourth quarter, unchanged from the third quarter.
Notes:
- “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.” — The Bureau of Economic Analysis.
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