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Sunday, September 15, 2019
HomeNewsEconomyGDP for Q4 2018 Grew at Solid 2.6 Percent, Beating Forecast

GDP for Q4 2018 Grew at Solid 2.6 Percent, Beating Forecast

Gross domestic product (GDP) graphic concept. (Photo: AdobeStock)

From Q4 2017 to Q4 2018, Real GDP Gained 3.1%; Gained by 2.9% From 2017 to 2018 Annual Level

Gross domestic product (GDP) graphic concept. (Photo: AdobeStock)
Gross domestic product (GDP) graphic concept. (Photo: AdobeStock)

The Bureau of Economic Analysis (BEA) said gross domestic product for the fourth quarter (Q4) 2018 came in at a solid 2.6%, beating the forecast. GDP for Q3 2018 came in at a strong 3.4%.

The consensus forecast was looking for 2.2%, with forecasts ranging from a low of 1.7% to a high of 2.8%.

Due to the partial government shutdown, this report replaces the release of the “advance” estimate originally scheduled for January 30 and the “second” estimate originally scheduled for February 28. An updated estimate will be released on March 28, 2019.

“Q4 GDP comes in at +2.6, well ahead of consensus. It’s ironic that the Q4 GDP report being delayed a month due to the shutdown, may have actually played to investors advantage,” Tim Anderson, analyst at TJM Investments said.

“Had the initial, or ‘advance’ GDP report been released in late January on schedule, it may have very well come in right around 2.0% given how weak so many other ‘soft data’ reports were for surveys that were taken in mid December through mid January.”

The price index for gross domestic purchases rose 1.6% in Q4, compared with an increase of 1.8% in Q3. The PCE price index rose 1.5%, compared with an increase of 1.6%.

Excluding food and energy prices, the PCE price index rose 1.7%, compared with an increase of 1.6%. Disposable personal income increased $218.7 billion or 5.7% in Q4, compared with an increase of $160.9 billion, or 4.2%, in Q3.

Real disposable personal income gained 4.2%, compared with an increase of 2.6%.

“Keep in mind that where we usually get 3 releases of quarterly GDP reports, this report combines the ‘advance’ and first revision,” Mr. Anderson noted. “We will get the final Q4 GDP report on schedule at the end of March.”

Real GDP increased by 2.9% in 2018 when measured from the 2017 annual level to the 2018 annual level. From Q4 2017 to Q4 2018, real GDP gained 3.1%, up from 2.5% in 2017.

“The Business investment components of Q4 GDP were much stronger than consensus,” he added. “Basically, this represents capital expenditures spending at a rate in Q4 that in no way reflects a pending major economic contraction, or recession, as was being fear mongered daily, the entire month of December.”

Regardless of which measurement used to gauge the annual rate, the U.S. economy in 2018 grew at the strongest pace since at least 2015.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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