GDP Growth Rate and Forecast

Economic Forecasts

Consumers, Home Buyers Keep Growth Afloat

Kiplinger’s latest forecast for the GDP growth rate


GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 170,000 per month in ’19 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.1% in ’19, up from 1.9% in ’18 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $50 to $55 per barrel in December More »
Housing 3.5% price growth by year-end ’19 More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Consumer spending was still the mainstay of economic growth in the third quarter. GDP grew at a 1.9% annual rate, about the same as the second quarter’s 2% rise. Home construction contributed to growth for the first time in seven quarters. Government spending also contributed. However, business investment in equipment, inventories and structures was weak. Businesses are still concerned about the slow global economy and declining international trade.

We do not expect a recession next year, but consumers are carrying a heavy load. If the weakness in business spending and exports starts to affect employment, then consumers may start to curb their spending.

Corporate profits bounced back in the second quarter after weakness in the first quarter. That was a welcome sign that may boost business confidence a bit, though profits at domestic nonfinancial corporations have not made it back to their peak level from the fourth quarter of 2018.

Fourth-quarter GDP growth will be roughly the same as the third quarter, though a couple of tenths lower because of the strike at General Motors. With the strike now resolved, the lost activity should be added back to growth in the first quarter of 2020. Overall GDP growth will soften a bit again in 2020 – an election year – dropping to about 1.8%. It is expected that the tax-cut stimulus will wane, and the trade deficit will again be a worry. Uncertainties about global growth may limit businesses’ willingness to expand. Any resolution of the U.S.-China trade war would be a positive for business spending.

Source: Department of Commerce: GDP Data