G.D.P. Report on Friday: An Economic Scorecard

What is the economic scorecard for the past year? A clearer look will come on Friday at 8:30 a.m. from the Commerce Department, which will report its initial estimate of economic growth in the fourth quarter.

If the report shows the economy expanded in those three months at an annual rate of 3 percent — as many analysts expect — it will be the first time that benchmark has been achieved in three consecutive quarters since 2004-5, before the last recession.

That would put the full year’s growth close to 2.7 percent, exceeding the 2015 showing of 2.6 percent, the best since the recession.

The economy recovered from a ploddingly slow start in the first three months of last year, when sharp cuts in consumer spending pushed gross domestic product growth down to 1.4 percent on an annualized basis. It sprang back over the next six months, with growth reaching 3.1 percent in the second quarter and 3.2 percent in the third.

Beth Ann Bovino, chief United States economist for Standard & Poor’s, offered a somewhat guarded fourth-quarter prediction of 2.7 percent. Holiday shopping was strong, she said, but the widening trade deficit, which reached $50.5 billion in November, could slow down G.D.P. gains. “That’s going to be a drag,” she said.

This is what you should watch for:

The economy remained remarkably resilient throughout 2017, and proponents of the Republican tax overhaul say it will accelerate investment and spending in the year ahead.

The jobless rate is sinking, consumer sentiment is strong, and the stock market is breaking record after record. Still, yearly growth will fall short of the heady 4 percent that President Trump has repeatedly promised. Annual growth has averaged roughly 2 percent since the end of the recession in 2009, and many economists think the United States is unlikely to achieve a yearly rate much above that level in the long run.

The American economy’s performance has been buoyed recently by a global upturn, which has fueled trade and enabled foreign consumers to buy more American products.

For several years after the recession, the steady if unremarkable recovery in the United States was a bright spot compared with struggles abroad. But in 2017, the expansion spread to at least 120 countries, according to a report released this week by the International Monetary Fund. In several, the rate outpaced that of the United States.

Among large economies in the Group of 7, the United States ranked fifth, according to a separate report from the World Economic Forum. On a list of 29 advanced economies, it ranked 10th, though sank close to the bottom in terms of equitably sharing the gains.

The I.M.F. added its voice to other institutions and economists who have warned that the economic gains projected over the next couple of years are not sustainable, particularly given the debt that the United States and other countries are building up.

“Political leaders and policymakers must stay mindful that the current economic momentum reflects a confluence of factors that is unlikely to last for long,” said Maurice Obstfeld, the fund’s chief economist.

The Commerce Department’s report on the gross domestic product is a rough draft. The fourth-quarter estimate will be revised twice in the next couple of months, and the final number could increase or drop by as much as a percentage point in either direction, based on previous recalculations. After all, government statisticians have to put together the fourth-quarter estimate without complete data on construction, trade and inventories.

Even after the final estimate is in, economists caution that people tend to read way too much into the G.D.P. figures. In recent years, more and more experts have warned of the increasing difficulty of measuring a knowledge-based economy where services like Facebook and Google are free and many innovations and improvements lack a price tag. Papers and presentations at the annual American Economics Association conference this month pointed out the measure’s shortcomings.

Measurement problems are not the only caveats. Although people often use G.D.P. as a proxy for well-being in addition to production, it is not. That is why Robert F. Kennedy complained in 1968 that G.D.P. “measures everything, in short, except that which makes life worthwhile.”

Content originally published on https://www.nytimes.com/2018/01/26/business/economy/gdp-economy.html by PATRICIA COHEN