According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) expanded at an annual rate of 2.1% in the fourth quarter of 2019, the same increase as in the third quarter. This marks the 23rd consecutive quarter of growth.
For the full year, real GDP increased 2.3% in 2019, down from a 2.9% increase in 2018 and matching NAHB’s forecast. It was the slowest growth in the past three years but remained at a solid pace.
The increase in real GDP in the fourth quarter of 2019 was largely driven by increases in personal consumption expenditures (PCE), which, alone, accounts for about 70 percent of the overall economy, government spending and exports. Meanwhile, imports, which are a subtraction in the calculation of GDP, decreased. Decreases in private inventory investment and nonresidential fixed investment had negative contributions to economic growth in the fourth quarter of 2019.
Moreover, residential fixed investment (RFI) posted a stronger growth in the fourth quarter with an annual rate of 5.8%, after rising 4.6% in the third quarter. The change in RFI contributed 0.21 percentage points to headline 2.1% GDP growth rate in the fourth quarter.
Real GDP growth in the fourth quarter was little changed from the prior period. In the fourth quarter, decreases in imports, gains in government spending and exports were offset by a larger decrease in gross private domestic investment and slowing in PCE.
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