Updated Jan 31, 2020 - Economy & Business

U.S. GDP growth slows to 2.3% in 2019

Expand chart
Data: Bureau of Economic Analysis; Note: Shows GDP average over the full year vs. prior year; Chart: Andrew Witherspoon/Axios

U.S. gross domestic product grew at a 2.1% annual rate in the final quarter of last year, the Commerce Department said on Thursday. For all of 2019, economic growth came in at 2.3% — less than the 2.9% in 2018.

Why it matters: The initial estimates from the government show that 2019 was the slowest pace of economic growth since Trump took office. The boost from the tax cuts gave way to pain from the trade war. Exports slumped last year, while uncertain business leaders held off on spending.

Details: Trump succeeded in fundamentally shifting the U.S. trade balance. Net exports added nearly 1.5 percentage points to GDP in the fourth quarter, though experts warn the gain was likely unsustainable.

  • Stephen Gallagher, chief U.S. economist at Societe Generale, said he expected a "major reversal" of the trade balance in the first quarter that would deduct one percentage point from first quarter GDP.
  • He also renewed the institution's forecast of a recession this year.

By the numbers: Q4 marked the third straight quarter of declining business investment — i.e. corporations investing in new equipment or factories.

  • There was a notable decline in inventories while overall gross private domestic investment fell 6.1% during the quarter.
  • Consumer spending is still solid, but showed some signs of slowing. The rate of spending was 1.8% in Q4, a drop-off from the 3.2% in the prior quarter.

What they're saying: The report drew the ire of trade groups opposed to Trump's tariffs on China, which remain largely in place even after the "phase one" deal.

  • “Tariffs are paid by American consumers and businesses, and prevented the U.S. economy from reaching its full potential last year," according to a statement from Americans for Free Trade, a coalition of businesses, farmers and manufacturers that's launched a multimillion dollar campaign against Trump's tariffs.
  • "It’s clear the trade war and tariffs are still impacting American businesses, workers, and consumers."

The bottom line: 2019 GDP came in above the economy's postrecession average of around 2% growth, as Marketwatch points out. Still, annual growth under Trump hasn't hit the administration's promise of 3%.

  • What they're saying: Heading into an election year, economic growth is "on unsteady footing," thanks to the indefinite production halt of Boeing's 737 Max and "global growth headwinds that may pick up linked to the coronavirus crisis across the globe," Joseph Brusuelas, chief economist at RSM US, wrote in a note to clients.

Go deeper: Nobel laureate Joseph Stiglitz calls for the end of GDP

Go deeper

How Trump’s economy stacks up

Source: "Presidents and US Economy", Trump figures through 2019 courtesy of Alan Blinder; Note: Data shows real GDP and Q1 growth in each term is attributed to the previous president; Chart: Axios Visuals

Average economic growth under President Trump has outpaced the growth under Barack Obama, but not all of his recent predecessors.

Why it matters: GDP is the most comprehensive economic scorecard — and something presidents, especially Trump, use as an example of success. And it's especially relevant since Trump is running for re-election on his economic record.

Trump's post-virus, pre-election boom

Illustration: Aïda Amer/Axios

The Wuhan coronavirus outbreak is already scuttling supply chains and wreaking havoc on companies around the world that do business in China, but if analysts' projections are correct, the rebound from the virus could help propel the U.S. economy to new heights right around the time of the 2020 presidential election.

Why it matters: With President Trump touting the stock market's performance and jobs growth as key accomplishments, that bounceback could play a major role in the election's outcome.

New York Fed says Boeing's production freeze could cut U.S. GDP growth by 20% in 2020

Photo: Roslan Rahman /AFP/Getty Images

Analysts at the New York Fed expect the all-out production stoppage on Boeing's 737 MAX will have a sizable negative impact on U.S. growth this year.

State of play: The decline will produce a 0.4% decline in GDP growth, the NY Fed's Julian di Giovanni finds.