What Will Today’s G.D.P. Reading Show? Here’s a Preview. - The New York Times

The Commerce Department will release its initial estimate of the gross domestic product — the broadest measure of goods and services produced in the economy — for the fourth quarter of 2019 at 8:30 a.m. on Thursday. Here’s what to watch for:

• Wall Street analysts expect the figures to show that the economy grew at an annual rate of about 2 percent from October through December, a shade behind the 2.1 percent growth over the previous three months.

• A fourth-quarter growth rate of 2 percent would amount to an increase of 2.3 percent year-over-year. That is weaker than the 2.5 percent rate for 2018, setting the stage for slower growth to come.

What’s normal?

The economy continues to expand, even though it has done so more slowly in recent months.

In the second half of 2017 and in some of 2018, the annual growth rate surged past 3 percent, helped by hearty tax cuts and government spending. And it continued to sail ahead at the start of last year, reaching 3.1 percent between January and March.

That level now looks more like an aberration, as the temporary spurs faded. Most economists see normal growth circling the 2 percent mark.

The slowdown, in part, reflects a maturing labor market in which the official jobless rate remains at half-century lows as the expansion heads toward its 11th anniversary.

“Given how tight labor markets have become and how challenging it is for businesses to find qualified employees to fill spots, 2 percent growth is welcome,” said Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm.

Is the shrinking American trade deficit a win or a loss?

An unexpectedly large jump in December’s imports reported on Wednesday caused some Wall Street analysts to reduce their estimates of G.D.P. growth in the fourth quarter.

G.D.P. measures only the value of goods and services produced within a country’s borders, so when a nation is buying more things abroad than it sells — the definition of a trade deficit — it pushes down G.D.P.

The Trump administration has made lowering the American trade deficit a goal. While the deficit excluding oil steadily climbed through most of President Trump’s tenure, it had fallen sharply in recent months before December’s figures came in.

Economists have opposed Mr. Trump’s use of the trade deficit as a scorecard: It can fall for a variety of reasons, and not all of them are good. Currently, economists say, the deficit has fallen because of factors reflecting weakness in the economy, rather than strength.

The trade deficit can drop because exports are growing, or because imports are shrinking, or both. For example, the deficit can fall because manufacturing is booming, pushing imported products out of the American market and leading to a surge in exports — the outcome the Trump administration wanted to engineer.

But the deficit can also fall because the American economy is slowing, making consumers less likely to buy imported goods and businesses less likely to invest in the United States. And that is the situation in the United States, economists say.

“There is no evidence of those broader positive developments,” said Brad W. Setser, a senior fellow in international economics at the Council on Foreign Relations. “There is no growth in exports, and manufacturing is weak. So to the extent that tariffs have succeeded in bringing the trade deficit down, they have done so largely by reducing U.S. demand, not by raising U.S. production.”

Imports fell sharply in September after the United States imposed tariffs on China because some American companies held off on buying goods, hoping that the Trump administration might soon strike a trade deal reducing or removing the tariffs.

As tensions eased in December, imports revived. With a Phase 1 trade deal now signed, imports are expected to climb further in the months to come.

The data has political ramifications.

The economy’s resilience has been one of the Trump’s administration’s most notable accomplishments, and is sure to loom large as the 2020 presidential campaign gains momentum.

Mr. Trump has maintained an enthusiastic bullishness on the economy even though growth has fallen well below his promises of 3 or 4 percent. At the World Economic Forum in Davos, Switzerland, this month, he declared that “the United States is in the midst of an economic boom the likes of which the world has never seen before.”

Mr. Trump has spread blame for the economic slowdown, reserving his harshest criticism for the Federal Reserve, which raised benchmark interest rates between 2015 and 2018 before cutting rates three times last year.

“No. 1, the Fed was not good,” he said.

The president also mentioned the six-week strike at General Motors last fall and the continuing turmoil at Boeing, the nation’s largest aerospace manufacturer and largest manufacturing exporter, after accidents involving two of its 737 Max airplanes killed 346 people.

“With all that, had we not done the big raise on interest, I think we would have been close to 4 percent,” he said.

Most economists disagree. The economy has not expanded by 3 percent or more in a full calendar year since 2005. As Mr. Herzon said, “We’re continuing along in this 2 percent economy.”

Nonetheless, expect Mr. Trump to claim economic success and the Democratic candidates to highlight the economy’s soft spots.

Boeing’s troubles are taking a toll.

Boeing has historically recorded bonanza sales in December, with the company selling an average of 234 airplanes over the past five years, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted in a newsletter. Last month, it sold just three. Strong sales of military aircraft offset the decline.

Still, Boeing’s halt in 737 Max production will ripple throughout the economy in the coming year. This week, Arconic, one of the airplane manufacturer’s suppliers, said it expected to lose $400 million in Boeing sales and cut jobs. Another contractor, Spirit AeroSystems Holdings, recently announced that it was cutting 2,800 jobs this month. Hundreds of other companies are also grappling to manage the impact.

Kathy Bostjancic, chief United States financial economist at Oxford Economics, said she expected Boeing’s disrupted production to shave half a percentage point off G.D.P. in the first three months of this year.

And remember …

The Commerce Department will revise the fourth-quarter results twice in the months ahead as more data comes in.

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