U.S. Economy Grows 1.9 Percent in Third Quarter

Today, the Department of Commerce’s Bureau of Economic Analysis (BEA) released the third quarter GDP growth number for 2019. The Bureau found that real gross domestic product increased at an annual rate of 1.9 percent in the third quarter.

“Today’s report shows that the U.S. economy continues its steady growth in defiance of media skeptics calling for a recession,” said Secretary of Commerce Wilbur Ross. “Since President Trump took office, wages have surged, unemployment has hit record lows, and poverty has fallen for all Americans, including the country’s most vulnerable.”

In the third quarter, U.S. consumer spending grew a healthy 2.9 percent, as American consumer confidence continued to buoy our country’s economic strength. Spending on durable goods led and jumped 7.6 percent from the second quarter. Business intellectual property investment rose 6.6 percent, signaling that American business will continue to lead the world with new ideas and inventions. The 1.6 percent growth in goods exports demonstrates that President Trump’s trade policies are bringing Made in America back.

This quarter’s growth number builds on a strong legacy of economic growth and accomplishments under President Donald Trump.

In September 2019, unemployment in the U.S. fell to 3.5 percent, hitting the lowest level in 50 years. The unemployment rate for Hispanic Americans and African Americans were also at record lows. The total numbers of employed Americans hit the highest level on record. Between 2017 and 2018, 2.3 million moreAmericans gained full-time, year-round employment, including 1.6 million women.

This has translated to higher incomes for average Americans. The Census Bureau reported in September that real median household income rose to more than $63,000 in 2018, the highest level in nearly two decades. Between 2017 and 2018, real median earnings of full-time, year-round workers rose 3.4% and 3.3% for men and women respectively. This good news tracks with Labor Department numbers, which marked more than a year of consecutive year-over-year hourly wage increases of 3.0 percent or higher. Before 2018, wage gains had not hit 3 percent since 2009.

The poverty rate has tumbled as well. In 2018, the poverty rate fell by 0.5 percent to the lowest level since 2001, as the growing economy lifted 1.7 million Americans out of poverty since just 2017. Disadvantaged groups such as Hispanic Americans and African Americans saw the largest poverty reductions. America’s children saw a 1.2 percentage points in poverty, while poverty for single mothers fell by 2.5 percentage points.

President Donald Trump’s economic and trade policies are delivering wins for the American people. A strong economy is lifting millions out of poverty and giving American workers long overdue pay increases.

Real Consumer Spending Rises in July

BEA Graphic on Real Disposable Personal Income and Real Consumer Spending
Bureau of Economic Analysis (BEA)

Personal income increased 0.1 percent in July after increasing 0.5 percent in June. Wages and salaries, the largest component of personal income, increased 0.2 percent in July after increasing 0.5 percent in June.

Current-dollar disposable personal income (DPI), after-tax income, increased 0.3 percent in July after increasing 0.4 percent in June.

Real DPI, income adjusted for taxes and inflation, increased 0.1 percent in July after increasing 
0.3 percent in June.

Real consumer spending (PCE), spending adjusted for price changes, increased 0.4 percent in July after increasing 0.2 percent in June.

Spending on durable goods increased 1.1 percent in July after showing no change in June.

PCE prices increased 0.2 percent in July after increasing 0.1 percent in June. Excluding food and 
energy, PCE prices increased 0.2 percent in July, the same increase as in June.

Personal saving as a percent of DPI was 7.7 percent in July and 8.0 percent in June.

U.S. Economy Adds Another 224,000 New Jobs in June As Wage Increases Remain Strong

The White House issued a press release said, The United States economy continues to flourish, according to the June Employment Situation Report released today by the Bureau of Labor Statistics (BLS). Total nonfarm payroll employment in June rose by 224,000 jobs, far exceeding market expectations (162,000). With July marking the longest economic expansion on record, it is a testament to the strength of the Administration’s economic policies that the economy continues to generate monthly job gains of this magnitude.

Including revisions for the months of April and May, the average pace of job growth has been a vigorous 192,000 jobs per month over the past year. In total, the economy has added more than 6 million jobs since President Donald J. Trump was elected. The June jobs report also reflects a rebound in job growth, suggesting that May’s revised outcome (+72K) was not a trend (see figure).

The education and health services industry, which added 61,000 jobs, experienced the largest job growth in June. Manufacturing jobs increased as well, gaining 17,000 jobs last month. Since the President’s election, the manufacturing industry has added more than 500,000 jobs.

The June report indicates that robust jobs growth is coupled with consistently strong wage growth. Nominal average hourly earnings rose by 3.1 percent over the past 12 months, marking the 11th straight month that that year-over-year wage gains were at or above 3 percent. Prior to 2018, nominal average hourly wage gains had not reached 3 percent since April 2009.

There is evidence that real wages are also growing when taking inflation into account. Based on the most recent Personal Consumption Expenditures (PCE) price index data from May, inflation in the past year was 1.5 percent, and based on the most recent Consumer Price Index (CPI-U) price data from May, inflation in the past year was 1.8 percent. (June inflation data is not yet available for either series.)

A separate household survey released by BLS shows that the unemployment rate ticked up to 3.7 percent in June—a change that is not significant—making June the 16th consecutive month at or below 4 percent. The Asian-American unemployment rate dropped to 2.1 percent, its lowest rate since at least 2003 when the current series began. The African-American unemployment rate ticked down by 0.2 percentage point to 6.0 percent, just above the May 2018 series low of 5.9 percent. (Consistent measurement began in 1972.)

There was also good news on the labor force participation rate—which includes people who are working and those looking for work—edged up by 0.1 percentage point to 62.9 percent and is 0.2 percentage point above the rate when the President was elected in November 2016. The labor force participation rate for prime-age adults (ages 25-54) which largely avoids the demographic effects of the aging population increased by 0.1 percentage point to at 82.2 percent—0.8 percentage points above its rate in November 2016 when the President was elected.

A prosperous economy stimulated by pro-worker policies is pulling workers off the sidelines. Despite the continued low unemployment rates over the past year, some workers may still be on the sidelines, a situation economists refer to as “labor slack.” Because labor market slack still exists, employment can continue to rise and the economy can continue to grow as workers reenter the labor force. In the second quarter of 2019, 73.7 percent of workers entering employment came from out of the labor force rather than from unemployment.

The June employment data portray an American economy that is humming along briskly, with a continued low unemployment rate, historic trends in job growth, and rising wages.

Foreign Direct Investment in the U.S. Rises in 2018

Graphic on New Foreign Direct Investment Expenditures by Type, 1996-2018. (U.S. Bureau of Economic Analysis)

On July 2, the Commerce Department’s Bureau of Economic Analysis (BEA) released updated annual statistics on the amount and characteristics of new investments in the United States by foreign investors.

Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $296.4 billion in 2018, up 8.7 percent from $272.8 billion in 2017.

Additional highlights of the statistics on new foreign direct investment for 2018:

  • Expenditures for acquisitions were $287.3 billion, expenditures to establish new U.S. businesses were $5.3 billion, and expenditures to expand existing foreign-owned businesses were $3.8 billion.
  • Total planned greenfield investment expenditures—expenditures to establish new U.S. businesses and to expand existing foreign-owned U.S. businesses—for investments initiated in 2018, which include both first-year spending and planned spending in other years, totaled $30.8 billion.
  • Employment at newly acquired, established, or expanded foreign-owned businesses in the United States was 430,600 in 2018.

Job creation smashes expectations, unemployment rate falls to 49-year low

The United States economy continued to thrive in April, with the unemployment rate dropping to 3.6 percent—the lowest unemployment rate since December 1969, according to the Bureau of Labor Statistics’ (BLS) household survey. April also marks the 14th consecutive month of the unemployment rate being at or below 4 percent.

The rapidly growing economy continues to benefit a wide range of demographic groups. The unemployment rate for adult women (20+) reached 3.1 percent in April, its lowest rate since 1953. The unemployment rate for Hispanics fell to 4.2 percent—the lowest rate since the series began in 1973. The unemployment rate for individuals with only a high school degree fell to 3.5 percent—matching the lowest rate since 2000. The unemployment rate for those with a disability fell to 6.3 percent in April—the lowest rate since the series began in 2008. Additionally, the unemployment rate for veterans fell to 2.3 percent—the lowest rate since the series began in 2000.

The U-6 unemployment rate, a broader measure of unemployment that includes those who are unemployed, marginally attached to the labor force, and working part-time for economic reasons, remained at 7.3 percent in April, matching the lowest U-6 rate since December 2000.

A separate survey from BLS, the Employment Situation Report, showed total nonfarm payroll employment in April rose by 263,000 jobs, far surpassing market expectations (190,000). In total, the economy has added over 5.8 million jobs since President Donald J. Trump was elected. The month of April continued the longest streak of growth on record.

Employment gains have exceeded 100,000 jobs in 27 of the 29 months since the 2016 election. Including revisions for the months of February and March, the average pace of job growth has been a healthy 218,000 jobs per month over the past year and 205,000 jobs per month so far in 2019. Job gains were predominantly concentrated in professional and business services (76,000 new jobs), education and health services (62,000 new jobs), and leisure and hospitality (34,000 new jobs). The construction sector added 33,000 new jobs in April, and has added 669,000 jobs since the 2016 election.

On top of the good news about job growth, the report indicates that wages are rising, too. Nominal average hourly earnings in April rose by 3.2 percent over the past 12 months, marking the 9th straight month that year-over-year wage gains were at or above 3 percent. Prior to 2018, nominal average hourly wage gains had not reached 3 percent since April 2009. Taking inflation into account, there is more evidence that real wages are also growing. Based on the most recent Personal Consumption Expenditures (PCE) price index data from March, inflation in the past year was 1.5 percent, and, based on the most recent Consumer Price Index (CPI-U) price data from March, inflation in the past year was 1.9 percent. This offers evidence that real wages are rising, and people are able to purchase more goods and services with their larger paychecks.

These most recent BLS surveys depict a strong American economy. Employment growth in April surpassed expectations with 263,000 new jobs, while the unemployment rate of 3.6 percent is the lowest rate in nearly half a century. With continued positive job growth, sustained low unemployment, and rising real wages, the economy continues to thrive.

U.S. Economy Grows 3.2 Percent in First Quarter

WASHINGTON – Today the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) released the first quarter 2019 Gross Domestic Product (GDP) numbers. The Bureau found that the real gross domestic product increased at an annual rate of 3.2 percent in the first quarter of 2019.

“This blockbuster GDP report shows that President Donald J. Trump’s policies are unleashing the vitality of the American economy, fulfilling the President’s promise for 3 percent economic growth and benefiting American workers in the form of better jobs and higher wages,” said Secretary of Commerce Wilbur Ross. “The Trump economy has repeatedly defied the skeptics who predicted an economic downturn and has restored America’s position in the world as a consistent source of economic growth.”

The U.S. economy has gotten off to a strong start so far in 2019. In January and February of 2019, the two months for which data is available, the U.S. trade deficit dropped well below expectations. This trend continued as exports alone drove nearly half a percentage point of overall GDP growth in the first quarter.

After starting off the year by adding over 300,000 jobs in January, the economy ended the first quarter at a 3.8 percent unemployment rate. In February, annual wage growth for hourly workers increased by 3.4 percent, the fastest rate since early 2009.

As they have since the start of his term in office, President Trump’s actions have yielded real results for American businesses, workers, and families, increasing incomes while cutting taxes and regulations.

Gross Domestic Product, Fourth Quarter and Annual 2018 (Initial Estimate)

Real gross domestic product (GDP) Feb 28th, increased at an annual rate of 2.6 percent in the fourth quarter of 2018, according to the “initial” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4 percent.

Due to the recent partial government shutdown, this initial report for the fourth quarter and annual GDP for 2018 replaces the release of the “advance” estimate originally scheduled for January 30th and the “second” estimate originally scheduled for February 28th.

The Bureau emphasized that the fourth-quarter initial estimate released today is based on source data that are incomplete or subject to further revision by the source agency. Updated estimates for the fourth quarter, based on more complete data, will be released on March 28, 2019.

The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, private inventory investment, and federal government spending. Those were partly offset by negative contributions from residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter reflected decelerations in private inventory investment, PCE, and federal government spending and a downturn in state and local government spending. These movements were partly offset by an upturn in exports and an acceleration in nonresidential fixed investment. Imports increased less in the fourth quarter than in the third quarter.

Current dollar GDP increased 4.6 percent, or $233.2 billion, in the fourth quarter to a level of $20.89 trillion. In the third quarter, current-dollar GDP increased 4.9 percent, or $246.3 billion.

The price index for gross domestic purchases increased 1.6 percent in the fourth quarter, compared with an increase of 1.8 percent in the third quarter. The PCE price index increased 1.5 percent, compared with an increase of 1.6 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent, compared with an increase of 1.6 percent.

Personal Income

Current-dollar personal incomeincreased $225.1 billion in the fourth quarter, compared with an increase of $190.6 billion in the third quarter. The acceleration in personal income reflected an upturn in farm proprietors’ income and accelerations in personal dividend income and personal interest income. Compensation of employees decelerated.

Disposable personal income increased $218.7 billion, or 5.7 percent, in the fourth quarter, compared with an increase of $160.9 billion, or 4.2 percent, in the third quarter. Real disposable personal income increased 4.2 percent, compared with an increase of 2.6 percent.

Personal saving was $1.06 trillion in the fourth quarter, compared with $996.0 billion in the third quarter. The personal saving rate — personal saving as a percentage of disposable personal income — was 6.7 percent in the fourth quarter, compared with 6.4 percent in the third quarter.

Updates to third quarter GDI

For the third quarter of 2018, the percent change in real GDI was revised from 4.3 percent to 4.6 percent based on newly available tabulations from the BLS Quarterly Census of Employment and Wages program.

2018 GDP

Real GDP increased 2.9 percent in 2018 (from the 2017 annual level to the 2018 annual level), compared with an increase of 2.2 percent in 2017.

The increase in real GDP in 2018 primarily reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, private inventory investment, and state and local government spending that were slightly offset by a small negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP from 2017 to 2018 primarily reflected accelerations in nonresidential fixed investment, private inventory investment, federal government spending, exports, and PCE, and an upturn in state and local government spending that were partly offset by a downturn in residential investment.

Current-dollar GDP increased 5.2 percent, or $1.02 trillion, in 2018 to a level of $20.50 trillion, compared with an increase of 4.2 percent, or $778.2 billion, in 2017.

The price index for gross domestic purchases increased 2.2 percent in 2018, compared with an increase of 1.9 percent in 2017. The PCE price index increased 2.0 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 1.9 percent, compared with an increase of 1.6 percent.

During 2018 (measured from the fourth quarter of 2017 to the fourth quarter of 2018), real GDP increased 3.1 percent, compared with an increase of 2.5 percent during 2017. The price index for gross domestic purchases increased 2.1 percent during 2018, compared with an increase of 1.9 percent during 2017.