Fourth Quarter GDP Report – Growth Continues, Albeit at a Slower Pace

Fourth Quarter GDP Report Updated

Gross Domestic Product (GDP) rose by 2.2% in the fourth quarter, which was in line with expectations. For the year, GDP grew 2.9%, matching 2015 for the strongest annual growth since the Great Recession. The consumer proved very resilient in the fourth quarter, with consumption up 2.5% despite stock market volatility and a partial government shutdown. Business investment also positively contributed 0.7% to GDP, although recent trends in durable goods orders show that this may be losing momentum. The consumer and business gains were partially offset by several factors. Housing related spending has now contracted in each of the last four quarters. Also, government consumption subtracted 0.1% from GDP compared to Q3 where it added 0.4%. This was largely expected given the partial government shutdown. The GDP report shows that although growth did slow some from earlier in 2018, the U.S. economy ended the year on very solid footing. However, as the effects from last year’s tax cuts begin to fade, we expect growth to moderate in 2019.