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US GDP growth slows down, corporate profits dip
30
Mar '18
US GDP growth slows down, corporate profits dip
The real gross domestic product (GDP) of the United States (US) increased at an annual rate of 2.9 per cent in the fourth quarter of 2017, according to the "third" estimate released by its Bureau of Economic Analysis (BEA). In the third quarter, real GDP increased 3.2 per cent. Corporate profits too decreased in the fourth quarter.
 
The GDP estimate released Thursday is based on more complete source data than were available for the "second" estimate issued in February. In the second estimate, the increase in real GDP was 2.5 per cent. With this third estimate for the fourth quarter, the general picture of economic growth remains the same; personal consumption expenditures (PCE) and private inventory investment were revised upwards, the BEA said.
 
An official release issued by the BEA remarked, "The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment that was partly offset by accelerations in PCE, exports, state and local government spending, nonresidential fixed investment, and federal government spending, and an upturn in residential fixed investment. Imports, which are a subtraction in the calculation of GDP, turned up."
 
Current-dollar GDP increased 5.3 percent, or $253.5 billion, in the fourth quarter to a level of $19,754.1 billion. In the third quarter, current-dollar GDP increased 5.3 percent, or $250.6 billion, the bureau commented.
 
The real gross domestic income (GDI) increased 0.9 per cent in the fourth quarter, compared to an increase of 2.4 per cent in the third. The average of real GDP and real GDI, a supplemental measure of US economic activity that equally weights GDP and GDI, increased 1.9 per cent in the fourth quarter, compared with an increase of 2.8 per cent in the third quarter.
 
The increase in real GDP in the fourth quarter primarily reflected positive contributions from PCE, nonresidential fixed investment, exports, residential fixed investment, state and local government spending, and federal government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.
 
The real GDP increased 2.3 per cent in 2017 (that is, from the 2016 annual level to the 2017 annual level), compared to an increase of 1.5 per cent in 2016. According to the BEA, "The increase in real GDP in 2017 reflected positive contributions from PCE, nonresidential fixed investment, and exports. These contributions were partly offset by a decline in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.
 
The acceleration in real GDP from 2016 to 2017 reflected upturns in nonresidential fixed investment and in exports and a smaller decrease in private inventory investment.  These movements were partly offset by decelerations in residential fixed investment and in state and local government spending. Imports, which are a subtraction in the calculation of GDP, accelerated."
 
Meanwhile, profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) decreased $1.1 billion in the fourth quarter, in contrast to an increase of $90.2 billion in the third quarter.
 
The BEA reported, "Profits of domestic financial corporations decreased $14.6 billion in the fourth quarter, in contrast to an increase of $47.8 billion in the third. Profits of domestic nonfinancial corporations increased $19.4 billion, compared with an increase of $10.4 billion. Rest-of-the-world  profits decreased $5.9 billion, in contrast to an increase of $32.0 billion. In the fourth quarter, receipts increased $14.9 billion, and payments increased $20.8 billion."

Fibre2Fashion News Desk – India


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