2018 GDP Growth Comes Up Short of 3% Goal

For most of us 2018 is already far in the rear-view mirror as we motor through 2019. Of course, following the Bureau of Economic Analysis of the United States Department of Commerce’s release of 2018 gross domestic product (GDP) figures today, those who keep an eye on the U.S. economy are finding themselves forced to look back. Those who do will find a bit of a mixed bag that includes some disappointments among otherwise strong results.

As MarketWatch reports, GDP growth ended up at 2.6% for the fourth quarter of 2018. While that’s far better than the 1.9% growth some economists had predicted, it’s down markedly from Q2’s 4.2% expansion and the 3.4% increase observed during Q3. For the year (also dragged down by a 2.2% first quarter) the U.S. averaged a 2.9% growth rate. In other words annual growth fell just short of the President’s stated 3% goal.

Somewhat ironically it seems that the Trump administration may have still been able to reach that 3% goal had it not been for the recent government shutdown. Although the shutdown took place mainly in January of this year, the Bureau of Economic Analysis estimates that it could have shaved .1% of growth from the fourth quarter. That may not have been enough to push the yearly average over the top but, if it did, it would have been a symbolic win for the President. Still the 2.9% growth for last year is an improvement over the 2.2% seen in 2017 and marks the best year of growth since 2015.

There are several reasons economists are citing for the year-end slowdown. Among them are continuing trade tensions with China that, despite apparent progress, have yet to be resolved. Additionally it is believed that the impacts felt following the passage of the Tax Cuts and Jobs Act have started to wain. What’s more is that slowing is expected to deepen from here on out. Capital Economic chief U.S. economist Paul Ashworth told CNN Business, “The first quarter won’t be this good. We expect GDP growth to slow to 2.2% this year and only 1.2% in 2020.”

Between the falling growth rate and narrowly missing the 3% mark, there are reasons for being pessimistic about the latest GDP report. At the same time figures have continually exceeded expectations, with fourth quarter numbers proving no exception. Therefore, while we can all make educated guesses about what’s ahead, it may be foolish to count out the U.S. economy just yet.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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