By Harriet Torry
WASHINGTON--The pace of U.S. growth was unchanged at a still-solid rate in the fourth quarter, and corporate profits rose at the close of last year.
Gross domestic product, a broad measure of the goods and services produced across the U.S., rose at a 2.1% seasonally and inflation-adjusted annual rate October through December, the Commerce Department said Thursday. This is a snapshot of the economy at the end of 2019 before the coronavirus pandemic took hold.
The agency previously estimated last quarter's growth rate was 2.1%. Economists surveyed by The Wall Street Journal had expected the figure to be unrevised in the latest report.
The economy grew 2.3% for the full-year 2019, the Commerce Department confirmed.
Economists project an economic contraction in the first quarter, which ends next week, due to a sharp drop in spending related to the coronavirus pandemic. Data firm IHS Markit expected a 1.8% first-quarter contraction in a forecast released Wednesday.
The revised data released Thursday showed consumer spending was slightly stronger than earlier estimated in the fourth quarter, and exports rose at a slightly faster rate last quarter than initially estimated. Business investment declined at a quicker pace.
Here are highlights of the revisions:
--Consumer spending, which accounts for more than two-thirds of U.S. economic output, increased at a 1.8% annual rate in the fourth quarter, compared with a prior estimate of 1.7%. That was a slowdown from the third quarter, when spending increased at a 3.2% rate.
--A measure of business investment, fixed nonresidential investment, declined at an 2.4% rate, compared with the prior reading of a 2.3% decline. Business investment declined in three out of four quarters last year, as uncertainty over trade policy caused companies to cut spending.
--Spending on home building and improvements increased at a 6.5% rate, versus a prior reading of a 6.2% rate. The residential-investment category boosted growth in the third and fourth quarters after six straight quarters of declines, as lower short-term interest rates helped the housing market.
--U.S. exports rose at a 2.1% rate, versus a prior estimate of a 2.0% increase. Imports, which subtract from the calculation of GDP, fell 8.4%. As a result, trade boosted fourth-quarter growth - adding 1.51 percentage point to the quarter's 2.1% growth rate - after proving a mild drag in the third quarter.
--Inventories were a drag on growth, subtracting 1.04 percentage point from the fourth quarter's growth rate. That was after inventories were broadly flat in the third quarter.
--Spending at all levels of government rose at an 2.5% rate, below the prior estimate of 2.6%.
Thursday's report also offered estimates of corporate profits for the fourth quarter.
--After-tax corporate profits without adjustments for inventory valuation and capital consumption, a measure of profits that quarter, advanced at a 3.7% rate in the fourth quarter from the prior quarter. The fourth-quarter rise followed a 1.2% decrease in the third quarter.
Compared with the fourth quarter of 2018, after-tax profits without inventory valuation and capital consumption adjustments rose 4.1%.
Write to Harriet Torry at email@example.com
(END) Dow Jones Newswires
March 26, 2020 09:22 ET (13:22 GMT)
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