An unchanged growth number can hide a different picture of business activity. BEA’s February 27, 2020 second estimate kept fourth-quarter real GDP growth at a 2.1 percent annualized rate, but raised its estimate of private inventory investment and lowered nonresidential fixed investment. The headline was stable even as the evidence about its components changed. [26]

The release also reported that imports decreased. Imports enter the GDP calculation as a subtraction, so their movement cannot be read as a simple score of how well competing suppliers were doing. Consumer spending, exports and government spending contributed positively to growth. These were national accounting results for a completed quarter, not a map of market share or customer choice. [26]

For a small supplier considering expansion, our analysis is that the aggregate offers context, not evidence of demand for its own product. Powell’s February 28 warning added a separate uncertainty: evolving coronavirus risks, with appropriate Fed action promised but no rate move announced. This February 29 retrospective uses those original releases, rather than treating past growth as a guarantee of access to customers or credit. [9][26]

Source documents

  1. Federal Reserve Board - Statement from Federal Reserve Chair Jerome H. Powellhttps://www.federalreserve.gov/newsevents/pressreleases/other20200228a.htm
  2. Gross Domestic Product, Fourth Quarter and Year 2019 (Second Estimate) | U.S. Bureau of Economic Analysis (BEA)https://www.bea.gov/news/2020/gross-domestic-product-fourth-quarter-and-year-2019-second-estimate