February 27, 2020

Executive Summary

Upon revision, fourth quarter gross domestic product (GDP) grew 2.1% on a seasonally-adjusted annualized basis, maintaining the same pace as the prior release, which was also the consensus expectation.

Several upward revisions—including net exports, business inventories and residential building—were completely offset by a sizable downward revision to business spending and slightly lower consumer spending, specifically on gasoline and energy purchases. Within net exports, exported goods were revised upward, which is a good sign.

Bottom Line

These were the first set of revisions with the final report coming in another month. Net exports will likely be adjusted upward with the next batch of revisions, but business spending and inventories may also slip lower. We expect fourth quarter GDP growth near 2.0%, which keeps full year 2019 GDP growth close to 2.3%.

Looking ahead to 2020, we maintain our view for around 2.3% GDP growth. However, it is too early to gauge the impact of the coronavirus (COVID-19) outbreak, which we anticipate will cause quarter-to-quarter fluctuation, especially in the first and second quarters. At this point, incoming first quarter economic data is tracking well ahead of our expectations (near 2%) and the consensus of 1.5%. That said, much of the data is not capturing the impact of COVID-19.

Editor’s Note: The final report of fourth quarter 2019 GDP will be released at 8:30AM ET on March 26, 2020.

Overview of Revisions to Major Categories

Disclosures

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CN2020-0494 EXP12-2020