Q4 2018 GDP Initial Estimate
Submitted by Atlas Indicators Investment Advisors on March 5th, 2019
America’s output in the final quarter of last year was better than many anticipated. A consensus estimate from Bloomberg was expecting the annualized rate of output to reach 2.2 percent, and the final calculation of the Federal Reserve Bank of Atlanta’s GDPNow forecast expected just 1.8 percent. However, the earliest estimate suggests output increased by 2.6 percent to end 2018.
In addition to the stronger than expected quarter-over-quarter tally, the year-over-year figure reached 3.1 percent, its highest level since the second quarter of 2015. This latest uptick in the 12-month lookback is the 10th quarterly gain in a row.
With 2018 fully behind us, we now have a better idea of how the year fared. GDP managed to reach 2.9 percent from January through December of last year. This is an improvement over the 2017 tally of 2.2 percent and much better than 2016’s 1.6 percent. Business investment led growth last year, rising to 6.0 percent from 4.8 percent a year earlier and a negative rate of change before that. Government expenditures also increased substantially after having a minus sign in 2017. Personal consumption was little changed, hitting 2.6 percent after rising 2.5 percent the year before.
Before we start sounding too Pollyannaish, there is a developing pattern to which we want to alert you. Annualized quarterly data decelerated for the second consecutive period. Furthermore, the second quarter of last year was very strong (rising 4.2 percent), so the year-over-year comparison is going to be extra challenging next quarter. An acceleration in the present quarter will help the comparison, but there are not many signs pointing to a strong uptick from January through March 2019 just yet.
This is the initial estimate for GDP of the final quarter of last year. This differs from the normal “advance” report because it came a month late due to the partial government shutdown. We’ll only get one more look at the fourth quarter data when it is released at the end of this month.
