January 26, 2018
According to the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) has increased at an annual rate of 2.6% in the fourth quarter of 2017, a reduction from the previous third quarter of 3.2% in 2017.
Components that positively contributed to this 2.6% growth rate are personal consumption expenditure (PCE), non-residential fixed investment, export, residential fixed investment, state and local government spending, and federal government spending.
The slower pace of growth in real GDP in the fourth quarter when compared to the third quarter was due to downturn in private inventory investment and an increase in imports.
When converted to current dollar (i.e., estimates are valued in the prices of the period when the transactions occurred), GDP increased by 5% or $238.3 for the fourth quarter compare to 5.3% or $250.6 in the third quarter 2017.
Personal Income
Both personal income and disposable personal income increased in the fourth quarter (2017) compare to the third quarter (2017). Personal saving rate which is personal saving as a percentage of disposable personal income was 2.6% in the fourth quarter versus 3.3% in the previous quarter.
Year over year real GDP increase by 2.3% in 2017, in comparison to a 1.5% increase in 2016. Components responsible for this increase are: personal consumption expenditure, non-residential fixed investment, export, residential fixed investment, state and local government spending, and federal government spending. These positive movements were offset by decline in residential fixed investment and in state and local government spending; imports also increase year over year.
GDP Price Index
The price index for gross domestic purchases increased 2.5% in the fourth quarter, compared with an increase of 1.7% in the third quarter. The PCE price index increased 2.8%, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.9%, compared with an increase of 1.3%.
Year over year, the price index for gross domestic purchases increased 1.8% in 2017, compared with an increase of 1.0% in 2016. The PCE price index increased 1.7%, compared with an increase of 1.2%. Excluding food and energy prices, the PCE price index increased 1.5%, compared with an increase of 1.8%.