MNI DATA IMPACT: US Q4 GDP Grows 2.1%; GDP Price Index 1.4%>

By Ryan Hauser

     WASHINGTON (MNI) - The advance estimate for fourth-quarter GDP 

growth came in as expected, up 2.1%, according to a data release from 

the Bureau of Economic Analysis on Thursday. 

     Consumer spending rose 1.8% but was the smallest increase since the 

first quarter of 2019. Growth in government spending, notably defense 

spending, residential fixed investment and exports made positive 

contributions to the expansion. 

     Offsetting that, a 8.7% fall in imports and another 1.5% drop in 

nonresidential fixed investment were a drag. A decrease in 

private inventoriy investment, notably retail motor vehicle dealers, 

also held down growth last quarter. 

     The change in the GDP price index came in at 1.4%, slightly below 

the 1.8% that markets expected. 

     Here are some of the key takeaways from the data released Thursday: 

     - Headline PCE inflation ticked higher to 1.6%, compared to 1.5% in 

the third quarter. But core PCE inflation, a better indicator 

of underlying price pressures, fell to 1.3% from 2.1% in the previous 

quarter, reflecting a downturn in prices of clothing and footwear and 

banking and financial services, the Commerce Department said. 

     - The fourth quarter data comes on the heels of yesterday's FOMC 

meeting, which saw the Federal Reserve keeping the federal funds rate 

unchanged after three rate cuts last year. In its release yesterday, the 

Fed highlighted "moderate" consumer spending and a strong labor market 

while noting that exports and business fixed investment remain 

weak--observations born out in today's GDP report. 

     - Thursday's GDP release anticipates market expections for GDP 

growth heading into 2020. At present, the Conference Board (which tracks 

leading economic indicators) and the International Monetary Fund are 

projecting 2.1% and 2.0% growth, respectively, for 2020. Recently, the 

global market has responded positively to the perceived reduction in 

trade uncertainty, and the IMF says fiscal stimulus and looser financial 

conditions should bolster US GDP in 2020.  

     ** MNI Washington Bureau: 202-371-2121 ** 

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