An Inside Look at the Q4 2024 GDP Second Estimate

Real gross domestic product (GDP) is comprised of four major subcomponents: personal consumption expenditures, gross private domestic investment, net exports, and government consumption expenditures. In the latest Q4 2024 second estimate update it was reported that real GDP increased at an annual rate of 2.3%. Three of the four components made positive contributions.

Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the fourth quarter of 2024, according to the second estimate. In the third quarter, real GDP increased 3.1 percent. The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased. (Link)

Last 4 quarters contributions to GDP Percent Change
  • Personal consumption expenditures (PCE) contributed 2.79
    • Down from Q4 advance estimate
    • Up from Q3 final estimate
  • Gross private domestic investment (GPDI) contributed -1.05
    • Down from Q4 advance estimate
    • Down from Q3 final estimate
  • Net exports of goods and services (NEGS) contributed 0.12
    • Up from Q4 advance estimate
    • Up from Q3 final estimate
  • Government consumption expenditures (GCE) contributed 0.49
    • Up from Q4 advance estimate
    • Down from Q3 final estimate

Over time, the personal consumption expenditures (PCE) component has demonstrated the strongest and most consistent correlation with real GDP. When PCE is positive, GDP tends to be positive as well, and when PCE declines, GDP often follows—though there have been exceptions, such as in Q2 2022.