WASHINGTON — Fourth quarter GDP rose 2.6% in the advance estimate, slower than the 3.0% pace expected, with the slowdown pinned to more tepid inventory growth and a wider trade gap, offset by a surge in consumption growth, data released Friday by the Bureau of Economic Analysis showed.
With strong gains in the most recent three quarters, GDP was up 2.3% for 2017 as a whole, compared with a 1.5% gain in 2016. On a fourth quarter over fourth quarter basis, GDP growth was up 2.5% after a 1.8% 4Q/4Q gain in 2016.
The core PCE price index rose 1.9% in the fourth quarter after a 1.3% increase in the third quarter. On a year/year basis, fourth quarter core PCE prices were up 1.5% after dipping to a 1.4% year/year rise in the third quarter. Even with this slight rebound, the year/year pace was still below what was seen at the end of 2016.
The overall GDP price index was up 2.4% in the fourth quarter after 2.1% pace of growth for the third quarter, about as expected as energy prices have crept up.
PCE was up 3.8% in the fourth quarter after a 2.2% rise in the third quarter, the strongest gain since the second quarter of 2016. The gain in fourth quarter PCE was led by sharp increases in both the durable and nondurable goods sectors and an acceleration in services spending.
Inventories were up $9.2 billion in the fourth quarter after a $38.5 billion jump in the third quarter, accounting for some of the fourth quarter GDP slowdown. When the inventory component is removed, real final sales rose 3.2% after a 2.4% gain in the third quarter.
The net export gap widened to $652.6 billion for the fourth quarter from $597.5 billion in the third quarter, also subtracting from the headline number.
Nonresidential fixed investment rose by 6.8% in the fourth quarter, up from a 4.7% gain in the third quarter, due in large part to a rebound in structures.
Residential fixed investment rose 11.6% in the fourth quarter, bouncing back from a 4.7% decline in the third quarter and a 7.3% drop in the second quarter.
Government spending rose 3.0% in the fourth quarter after a 0.7% rise in the third quarter.
