4th Quarter GDP On High End of Expectations at 2.6%


The BEA combined the advance and second estimate into an "initial" report. Some data items were missing.

Based on incomplete data, the BEA reports the Initial Estimate of 4th-Quarter GDP at 2.6%.

Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of 2018, according to the "initial" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4 percent.

Due to the recent partial government shutdown, this initial report for the fourth quarter and annual GDP for 2018 replaces the release of the "advance" estimate originally scheduled for January 30th and the "second" estimate originally scheduled for February 28th.

The Bureau emphasized that the fourth-quarter initial estimate released today is based on source data that are incomplete or subject to further revision by the source agency. Updated estimates for the fourth quarter, based on more complete data, will be released on March 28, 2019.

The Econoday consensus was 2.2% in a range of 1.7% to 2.8%.

Minor Shutdown Impact

BEA estimates the impact of these reductions in services provided by the federal government subtracted about 0.1 percentage point from real GDP growth in the fourth quarter.


The GDP price index deflator was 1.8 percent, the same as for the third quarter.

The price index for gross domestic purchases, measures the prices of goods and services purchased by U.S. residents, regardless of where the goods and services are produced. In the fourth quarter, this index increased 1.6 percent, compared with a 1.8 percent increase in the third. Excluding food and energy, gross domestic purchases prices increased 1.8 percent, the same increase as in the third.

The PCE price index increased 1.5 percent in the fourth quarter, following an increase of 1.6 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent after increasing 1.6 percent.


The BEA notes that It is not possible to estimate the overall impact of the California wildfires on GDP.

It also says the destruction of fixed assets, such as residential and nonresidential structures, does not directly affect GDP or personal income.

Contributions to GDP

  • Personal Consumption Expenditures PCE contributed 1.92 percentage points (Goods 0.80 and Services 1.11). Some data is missing for services.
  • Gross Private Domestic contributed 0.82 PP.
  • Change in Private Inventories contributed 0.13 PP
  • Net Exports subtracted 0.22 PP.

In light of the collapse in consumer spending in December and the slowdown in housing, some of these numbers seem questionable.

Yet, the BEA notes that it had three months of data for consumer spending on goods; shipments of capital equipment; motor vehicle sales and inventories; durable and nondurable goods manufacturing inventories; wholesale and retail trade inventories; exports and imports of goods.

Services, which contributed 1.11 percentage points to GDP, are a likely source of revisions.The BEA notes quarterly data on revenue and expenses for services industries were not available.

The BEA used 1.8% as its measure of inflation. If you believe that is on the low side, the then GDP estimate is on the high side.

Mike "Mish" Shedlock

Comments (8)
No. 1-5

Steady as she goes. If the Fed can keep these numbers in the 1-3% range a bit longer, they can augment faith that they still hold the reins.

Seems everyday leads the Fed closer to capitulating to the MMT meme, in spite of Jay's jawboning. Aside from the consideration that the 2020 election campaign pressures are building.



The Chicago Purchasing Managers Index (PMI) just blew the estimates out of the water; highest in 2 years at 64.7. Looks like we'll have to wait a bit longer for the next recession. As for the GDP, those numbers are ALWAYS getting revised.


I'm still expecting 2% growth this year and possibly next year as well. I don't see a recession this year, as Mish does.


They're gonna be forced to raise the dept limit by at least 4 trillion just to get through next election,that means trump will have racked up as much red ink in 4 years as barry did in 8 to drive that pathetic gdp print.


Its surprising that employment has been as strong as it has been over the past 8 years especially where GDP less than 3% every year except for 2018. (even less than 2% for 2 years between 2011 & 2015)

It used to be that you needed 2% GDP just for employment to keep up with working age population and to keep the unemployment rate from rising.

The unemployment rate is under 4% and job growth is best on record despite such low GDP growth, however consumer spending and business investment has been white hot since 2010.

Everywhere from white collar corporate six figure jobs to blue collar tradesmen employers are complaining that they just cannot find people and they get no responses to ads posted on Indeed.com etc..

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