U.S. Growth Unrevised at 2.1% Rate in Fourth Quarter

Date : 26/03/2020 @ 13:37
Source : Dow Jones News

U.S. Growth Unrevised at 2.1% Rate in Fourth Quarter

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 harriet.torry@wsj.com

 

(END) Dow Jones Newswires

March 26, 2020 09:22 ET (13:22 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
$
ADVFN Advertorial
Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20200329 08:26:17