Q4 GDP Growth = 2.6%

From CNBC:

U.S. economic growth was better than expected as 2018 came to a close, with GDP rising 2.6 percent, according to a first estimate the Commerce Department released Thursday.

Economists surveyed by Dow Jones expected a gain of 2.2 percent after a 3.4 percent rise in the third quarter. The growth came amid a bevy of uncertainty and a time when the stock market briefly slid into bear market territory.

While the GDP report was only preliminary, it would mean average growth for the year was 3.1 percent.

Growth was helped by a 2.8 percent rise in consumer spending along with increased nonresidential fixed investment, exports, private inventory investment, and federal government spending. Weakness in residential fixed investment, which fell 3.5 percent, and state and local government spending served as a drag. The gross private domestic investment gain slowed to 4.6 percent in the quarter after a robust 15.2 percent rise in the previous period.

Exports rose 1.6 percent in the quarter, reversing a 4.9 percent decline in the previous quarter, while imports increased by 2.7 percent, making trade a slight net negative.

Last year was the best year for economic growth since 2005, narrowly beating out 2006 and 2015.

Here’s a look at annualized real GDP growth per capita:
50s: 2.53%
60s: 3.06%
70s: 2.19%
80s: 2.14%
90s: 2.10%
00s: 0.82%
10s: 1.48% (so far)

The big surge in the early 60s is an outlier. Long-term growth was remarkably stable from the mid-1960s until the last recession.

It’s interesting how this data undercuts so much cultural history (70s = bad economy; 80s = good economy). For example, 1978 was the second-best year for growth in the last 45 years, and it was mid-cycle, too, not rebounding off the bottom. I would not have guessed that. Or, after the surge from the Korea War, growth in the 1950s wasn’t that great.

Posted by on February 28th, 2019 at 9:20 am


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