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 150,000 per month in ’20 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.2% through ’20, from 2.3% at end '19 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $60 to $65 per barrel in March More »
Housing Total starts up 3.2% in '20 More »
Retail sales Retail and food service sales excluding autos and gas should rise 3.5% in 2020 More »
Trade deficit Widening 6% in ’20 More »

Consumer spending was still the mainstay of economic growth in the third quarter. GDP grew at a 2.1% 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 and structures was weak, though inventories improved a bit. 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 rose again in the third quarter after rebounding in the second, 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 should be lower than the third quarter, at around 1.2%. Consumer and government spending is slowing moderately, and a couple tenths of a percentage point of growth were lost 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 1.7%. 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