US GDP growth for Q4 came in at +2.1%, unchanged from Q3, beating expectations. That puts annual US GDP growth for 2019 at +2.3%, as expected, down from +2.9% in 2018.
Composition of Q4 GDP growth was as follows: +2.1% = +1.2 consumption -0.2 business investment -1.1 inventories +0.2 housing +0.5 government spending +1.5 net exports
If we look beneath the headline figure, the Q4 GDP numbers are not particularly good.
Consumption grew at a rate of +1.8% in Q4, down from +3.2% in Q3, and contributed just +1.2 points to overall GDP growth.
Business investment fell by -1.5% in Q4, its third straight quarter in decline. Businesses also cut back their inventories, paring a full -1.1 points from output growth.
Residential investment grew at a rate of +5.8% in Q4, up from +4.6% in Q3, the second straight quarter of a solid rebound following an extended slowdown.
Government spending grew by +2.7% in Q4, up from +1.7% in Q3, and added half a point to GDP growth. This was driven in part by a +4.9% rise in federal defense spending.
The US trade deficit narrowed in Q4, translating to an additional +1.5 points to growth. However, exports rose just +1.2%, while imports fell -8.7%, a possible sign of economic weakness rather than strength.
The PCE price index rose at a rate of +1.6% in Q4, up from +1.5% in Q3. Core PCE (excluding energy and food) rose +1.3% in Q4, down from +2.1% in Q3.
No big uptick in inflation, despite rising oil prices.
No big uptick in inflation, despite rising oil prices.
If we turn to the annual 2019 GDP numbers ...
The composition of 2019 annual GDP growth was as follows: +2.3% = +1.8 consumption +0.3 business investment +0.1 inventories -0.1 housing +0.4 government spending -0.2 net exports
This is in contrast to the 2018 composition of GDP growth: +2.9% = +2.1 consumption +0.8 business investment +0.1 inventories -0.1 housing +0.3 government spending -0.3 net exports.
Consumption grew by +2.3% in 2019, down from +2.9% in 2018.
Business investment grew by +2.1% in 2019, down from +6.4% in 2018, and the last three quarters saw a decline from its Q1 peak.
Inventory accumulation was not a major factor in either 2018 or 2019 annual growth.
Residential investment fell -1.5% in 2019, the same as in 2018. But housing saw a solid rebound in the last two quarters of the year.
Government spending rose +2.3% in 2019, up from +1.7% in 2018. In particular, federal defense spending rose +4.9% in 2019, up from +3.3% in 2018, while federal non-defense spending rose +1.6%, down from +2.4%. State and local spending rose +1.6%, up from +1.0%.
The US trade deficit widened in 2019, despite narrowing in Q4, shaving -0.2 points off annual GDP growth. US exports were flat (zero growth) from 2018 to 2019, while imports only rose +1.1% in 2019, down from +4.4% in 2018.
I'm particularly struck by the fact that US exports saw no growth in 2019, at least in inflation-adjusted terms. Goods exports increased slightly, while services exports fell slightly.
Q4 GDP got a big bump from a narrower US trade deficit, but this mainly came from falling imports, which is not an encouraging sign given slower consumption growth and a continued decline in business investment.
Overall, I would say that the better-than-expected GDP figure for Q4 masks continued weakening trends, with the notable exception of a rebound in housing.
This is incorrect. Consumption grew by +2.6% in 2019, down from +3.0% in 2018.
Here's a table summarizing today's GDP figures by comparison: 
Just to note, my initial tweet on annual consumption growth was incorrect, I was obviously looking at the wrong line. It actually slowed from +3.0% in 2018 to +2.6% in 2019.
