Economy Watch: GDP Grew Faster Than Previously Reported in 4Q

By D.C. Stribling, Contributing Editor

Source: U.S. Bureau of Economic Analysis

Real U.S. gross domestic product increased at an annualized rate of 2.9 percent in the fourth quarter of 2017, according to the Bureau of Economic Analysis’ final (third) estimate, which was released on Wednesday. In the third quarter of last year, real GDP increased at an annualized rate of 3.2 percent.

The latest GDP estimate is based on more complete source data than were available for the second estimate in February, the BEA said. In the second estimate, the annualized increase in real GDP was 2.5 percent. With this third estimate for the fourth quarter, the overall picture of economic growth remains about the same.

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

For the entire calendar year of 2017, real U.S. GDP increased 2.3 percent compared with the previous year. In 2016, the increase was 1.5 percent compared with 2015. The increase in real GDP in 2017 primarily reflected higher personal consumption expenditures, nonresidential fixed investment and exports. These were partly offset by a decline in private inventory investment.