U.S. GDP UP 2.2%

U.S. BEA - Gross Domestic Product, 4th quarter and annual 2018 (third estimate); Corporate Profits, 4th quarter and annual 2018

Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the fourth quarter of 2018 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "initial" estimate issued last month. In the initial estimate, the increase in real GDP was 2.6 percent. With this estimate for the fourth quarter, the general picture of economic growth remains the same; personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment were revised down; imports, which are a subtraction in the calculation of GDP, were also revised down (see "Updates to GDP" on page 2).

Real gross domestic income (GDI) increased 1.7 percent in the fourth quarter, compared with an increase of 4.6 percent in the third quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 1.9 percent in the fourth quarter, compared with an increase of 4.0 percent in the third quarter (table 1).

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, private inventory investment, and federal government spending. Those were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP growth in the fourth quarter reflected decelerations in private inventory investment, PCE, and federal government spending and a downturn in state and local government spending. These movements were partly offset by an upturn in exports and an acceleration in nonresidential fixed investment. Imports increased less in the fourth quarter than in the third quarter.

Current dollar GDP increased 4.1 percent, or $206.9 billion, in the fourth quarter to a level of $20.87 trillion. In the third quarter, current-dollar GDP increased 4.9 percent, or $246.3 billion (table 1 and table 3).

The price index for gross domestic purchases increased 1.7 percent in the fourth quarter, compared with an increase of 1.8 percent in the third quarter (table 4). The PCE price index increased 1.5 percent, compared with an increase of 1.6 percent. Excluding food and energy prices, the PCE price index increased 1.8 percent, compared with an increase of 1.6 percent.

Updates to GDP

The fourth-quarter change in real GDP was revised down 0.4 percentage point, reflecting downward revisions to PCE, state and local govermment spending, and nonresidential fixed investment that were partly offset by a downward revision to imports. For more information, see the Technical Note. A detailed "Key Source Data and Assumptions" file is also posted for each release. For information on updates to GDP, see the "Additional Information" section that follows.

2018 GDP

Real GDP increased 2.9 percent in 2018 (from the 2017 annual level to the 2018 annual level), compared with an increase of 2.2 percent in 2017 (table 1).

The increase in real GDP in 2018 primarily reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, private inventory investment, and state and local government spending that were slightly offset by a small negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The acceleration in real GDP from 2017 to 2018 primarily reflected accelerations in nonresidential fixed investment, private inventory investment, federal government spending, exports, and PCE, and an upturn in state and local government spending that were partly offset by a downturn in residential investment.

Current-dollar GDP increased 5.2 percent, or $1.01 trillion, in 2018 to a level of $20.49 trillion, compared with an increase of 4.2 percent, or $778.2 billion, in 2017 (table 1 and table 3).

Real GDI increased 2.4 percent in 2018, compared with an increase of 2.3 percent in 2017 (table 1).

The price index for gross domestic purchases increased 2.2 percent in 2018, compared with an increase of 1.9 percent in 2017 (table 4). The PCE price index increased 2.0 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 1.9 percent, compared with an increase of 1.6 percent (table 4).

Measured from the fourth quarter of 2017 to the fourth quarter of 2018, real GDP increased 3.0 percent during the period. That compared with an increase of 2.5 percent during 2017. The price index for gross domestic purchases increased 2.1 percent during 2018, compared with an increase of 1.9 percent. Real GDI increased 2.7 percent during 2018, compared with an increase of 2.3 percent (table 6).

Corporate Profits (table 10)

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $9.7 billion in the fourth quarter, in contrast to an increase of $78.2 billion in the third quarter.

Profits of domestic financial corporations decreased $25.2 billion in the fourth quarter, compared with a decrease of $6.1 billion in the third quarter. Profits of domestic nonfinancial corporations increased $13.6 billion, compared with an increase of $83.0 billion. Rest-of-the-world profits increased $1.9 billion, compared with an increase of $1.3 billion. In the fourth quarter, receipts increased $8.8 billion, and payments increased $6.9 billion.

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