4Q19 GDP: Consumption Ended Weaker

Bottom Line: Economic activity for the 4th Quarter was unchanged on net from previous reports in the final reading. However, there were downward revisions to consumption that were mostly offset by gains in trade. This suggests the consumer ended the quarter on a weaker note than previously thought. Of course, this is old news with the 1st Quarter ending early next week amid potentially the largest exogenous shock to the economy in history. For now, the 1st Quarter projections suggest between 1.5 - 3.2% annualized. However, after today's jobless claims data, the hit to the economy in the last two weeks of the quarter from the shutdowns for the coronavirus suggests 1st Quarter GDP could be negative. The 2nd Quarter is almost impossible to caveat -- recall that annualized figures are quoted, but forecasts range from -5% to -35%. GDP was UNCHANGED at 2.1% in this third estimate for 2019 4th Quarter. This compared with market expectations for no change revision to 2.1%. Economic activity is now 2.3% above its year-ago level. In final sales categories, net exports, residential investment, exports, government purchases, fixed-investment were revised higher while, imports and consumption were revised lower. As a result of all of these changes, real final sales was revised up by 1.2 percentage points to 3.1% while real domestic demand was revised down by 0.5 percentage points to 1.5%. The GDP Price Index was REVISED LOWER by 0.53 points to 1.3%, compared with market expectations of 1.3%. Economy-wide prices are now 1.6% ABOVE year ago levels.