Revised Gross Domestic Product Q4 2017

Fourth quarter 2017 gross domestic product (GDP) was revised down marginally after more complete data were gathered.  The Bureau of Economic Analysis (BEA) downgraded the annualized growth rate to 2.5 percent from 2.6 percent in the first estimate.  With a change as minor as this, the overall picture of economic growth remains the same.

Let’s look at the changes in the four components of GDP.  First, consumption was left unchanged in the revised report, but the composition of the total was altered a little; less was spent on goods (both durable and nondurable) while more services were purchased.  Next, business investment was downgraded marginally as residential building grew slower than first estimated.  Thirdly, net-exports were slightly better than first thought; both imports and exports were upwardly revised, but exports received a marginally larger upgrade.  Finally, government spending was less than previously measured.  While state and local spending were greater than first counted, this was more than offset by a downwardly revised measure of federal spending.

America’s economy remains in the virtuous portion of the business cycle, but output has its challenges.  In particular, business investment is slowing from an already anemic pace.  As you can see in the chart, the year-over-year trend decelerated in the final quarter of last year, after being on the low end of typical growth rates.  Early indications for the first quarter of 2018 suggest this portion of output remains sluggish.  But before we know if the slow pace continued to start this year, we’ll get one more look at the fourth quarter of 2017 when the BEA releases it final revision at the end of this month.