This rate of growth, which compares the third and fourth quarters of 2019, remains unchanged from the previous quarter.
The Commerce Department released the gross domestic product (GDP) figures Thursday, noting that growth was buoyed by positive contributions from personal consumption expenditures, federal government spending, state and local government spending, residential fixed investment, and exports.
Headwinds to economic expansion include negative contributions from private inventory investment and nonresidential fixed investment, the Commerce Department said.
The GDP number is an advance estimate and so is subject to revision.
Economic growth for the full year came in at 2.3 percent for 2019, the Commerce Department figures show, which is a drop of 0.6 percent compared to the 2018 rate of economic expansion of 2.9 percent.
Factors that helped lift GDP in 2019 include positive contributions from personal consumption expenditures, nonresidential fixed investment, federal government spending, state and local government spending, and private inventory investment.
The Commerce Department attributed headwinds to 2019 growth mostly to a slowdown in nonresidential fixed investment and personal consumption, as well as contraction in exports.
While imports grew in 2019, they did so to a lesser extent than in 2018. Economists polled by Reuters said the smaller trade deficit may have added as much as 1.9 percentage points to GDP growth in the fourth quarter.
Overall, the full-year figures show that while the U.S. economy has slowed in rate-of-growth terms, it is still squarely in expansion territory.
The United States is in its longest expansion in history, now in its 11th year.
The report comes on the heels of the U.S. Federal Reserve’s interest-rate setting body ruling to keep rates unchanged. The Federal Open Market Committee decided Wednesday to hold the benchmark Federal Funds target rate within the 1.5 to 1.75 percent range.
Fed Chairman Jerome Powell told reporters on Wednesday the U.S. central bank expected “moderate economic growth to continue” but also nodded to some risks, including the recent coronavirus outbreak in China and stubbornly below-target inflation.
The Fed has been wary of allowing inflation to run too cool, afraid of pushing the public’s price growth expectations lower and landing in a Japan-like zone of persistent economic stagnation.
“While low and stable inflation is certainly a good thing, inflation that runs persistently below our objective can lead to an unhealthy dynamic in which longer-term inflation expectations drift down, pulling actual inflation even lower,” Powell said in a statement after the FOMC meeting concluded on Wednesday (pdf).
Powell expressed dissatisfaction that “inflation continues to run below our symmetric 2 percent objective” and suggested the Fed would do what it takes to prevent below-target inflation.
“We’re strongly committed to achieving our symmetric 2 percent inflation goal,” Powell insisted.
‘Further Evidence of Cycle Extension’
The United States’ 18-month-long trade war with China last year fueled fears of a recession among some economists and market watchers, but the economic outlook has improved with this month’s signing of a Phase 1 deal with Beijing, and a recent analysis of economic indicators showed that the risk of a recession has fallen significantly.
Prospects for the U.S. economy have picked up, according to a business cycle analysis by Nicholas Reece, senior financial analyst and portfolio manager at Merk Investments.
“While a few pictures still look concerning, there are enough recession disconfirmations to make me more positive than negative,” Reece said. “My base-case view is that we are in the process of coming out of a mid-cycle—or perhaps late-cycle—slowdown, and that we will see further evidence of cycle extension.”
“We’re probably going to see the data start to improve,” he added. “Some of the data that’s been weak like the manufacturing PMIs maybe most importantly, to see those improve in the coming months, and then we’re going to get this kind of cycle extension, which could last for a few more years.”