Last Thursday the Bureau of Economic Analysis reported that the gross domestic product (GDP) for the fourth quarter of 2018 grew by 2.6 percent. While it’s not as high as the huge gains seen earlier in the year (GDP grew by more than 4 percent in the second quarter), it’s still a large increase. This gain in GDP was led by stronger non-residential investments, imports, private investments and federal government spending.
Disposable personal income (which is the money left over after taxes) increased by 5.7 percent in Q4 2018, after a 4.2 percent increase in Q3. Personal savings also increased, breaking a total of 1 trillion dollars in the fourth quarter. The personal savings rate was 6.7 percent, meaning that the average person saved almost 7 percent of their income after taxes. This is good news as it means there is more money left in consumers and homebuyer’s pockets, and they are saving more of that money, too.
Meanwhile, real GDP, which is GDP already adjusted for inflation, increased by 2.9 percent over the entire year of 2018.