ARLINGTON, Va.—The U.S. economy grew by 2.1% in the fourth quarter, remaining unchanged from its third quarter pace, according to the Commerce Department's initial GDP estimate.
NAFCU Chief Economist and Vice President of Research Curt Long attributed this growth to consumer spending, despite a modest slow, and trade and residential investment.
"Trade and geopolitical uncertainty are often cited as reasons for the slowdown, and some would paint a bleak picture for 2020," said Long. "However, much of the 2019 decline was concentrated in structures, and the architectural billings index has been improving. Overall, the economy is in decent shape."
"Fears are understandable given the unknown impact of the coronavirus and various geopolitical risks, but there is little basis for recessionary concerns," Long concluded.
Contributions to growth of real GDP came from gains in net exports (+1.5%), consumption (+1.2%), government spending (+0.5%), and residential investment (+0.2%). Growth was reduced by changes in inventories (-1.1%) and business investment (-0.2%).
PCE inflation, the Fed's preferred inflation metric, stayed relatively constant, increasing from 1.5% in the third quarter to 1.6 in the fourth quarter. Core PCE inflation (excluding food and energy) decreased from 2.1% to 1.3% over that time.
Long noted that fourth quarter measures for real gross domestic income and nominal corporate profits will be included in future GDP releases.