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First Cut: Second estimate of 4Q GDP looks much the same as the advance estimate

The second estimate for GDP in the fourth quarter 2019 put growth at up 2.1%, the same as in the advance estimate. The composition of growth also looked remarkably similar. If personal consumption expenditures were a tad lower, gross investment was a tad higher. Revisions to net exports and the change in private inventories were unnoticeable at the headline level.

Given that the first quarter 2020 is nearly 2/3 gone, the focus is rapidly moving away from the fourth quarter and on to the risks facing growth now. Effects from the COVID-19 outbreak are so far limited in the US economy, but could accelerate in March. Production shutdowns at Boeing facilities that produce the 737 MAX aircraft began in January are going to bite into some aspects of growth, especially as they appear to be lasting longer than first anticipated. Business investment is still largely absent from the equation and a riskier economic outlook isn’t going to encourage spending there any time in the near term. It will be up to consumer spending to keep the pace of expansion at least modest for the first quarter. Fortunately, that appears to be the case with a vigorous housing market to stimulate spending.

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