Economy Watch: GDP Growth Slows in Q4

The Bureau of Economic Analysis' second estimate for fourth-quarter U.S. GDP still points to a tepid 1.9 percent increase, following a boost in the previous quarter.
Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Real U.S. gross domestic product increased at an annualized rate of 1.9 percent in the fourth quarter of 2016, according to the second estimate by the Bureau of Economic Analysis, which was released on Tuesday. The rate represents a slowdown from previous quarters. In the third quarter, real GDP increased 3.5 percent.

The revised GDP estimate—the BEA always releases three—is based on more complete source data than were available for the advance estimate in January. Even so, in the advance estimate, the increase in real GDP was also 1.9 percent.

With the second estimate for the fourth quarter, the general picture of economic growth remains the same, with some adjustments. The increase in personal consumption expenditures was larger than previously thought, and increases in state and local government spending and in nonresidential fixed investment were smaller.

Positive contributions to real GDP in the fourth quarter came from personal consumption expenditures (people spending their money), private inventory investment (businesses spending theirs), residential fixed investment, nonresidential fixed investment, and state and local government spending. Negative contributions to fourth-quarter real GDP reflected a downturn in exports, an acceleration in imports, and a downturn in federal government spending.