What to expect in the GDP numbers out Thursday

On Thursday, we’ll finally find out how the economy did at the end of 2018. The picture looks increasingly gloomy.

The Bureau of Economic Analysis postponed the release of gross domestic product for the fourth quarter because of the government shutdown. It also delayed indicators that will feed into the report — such as retail sales, capital spending and residential construction — which all point toward a mounting slowdown through the holidays.

“Virtually every key economic report for December and January has come in weaker than expected,” wrote Oxford Economics’ Bob Schwartz in a note to clients. The labor market has been a bright spot, he wrote, but it could just be catching up to a business cycle on its way out.

As usual, forecasters disagree about where the number will end up, but nobody thinks that last year’s blazing pace sustained itself through the end of 2018.

The Federal Reserve Bank of Atlanta forecast 1.8% growth for the fourth quarter, down from an earlier prediction of 3%. The New York Fed’s projected a rosier 2.3% growth for the fourth quarter, but even that would still represent a deceleration from the 4.2% and 3.4% of the two previous quarters.

The United States has been flying relatively high while the rest of the globe has started to sink. China’s economic growth slowed dramatically in recent months, in part because of American tariffs on major exports. Global financial watchdogs like the World Bank and the International Monetary Fund have warned that mounting weakness in Germany and Turkey could spread regionally.

Until the holidays, the United States appeared relatively stable, with a robust pace of job creation. But large sectors of the economy, including housing and manufacturing, turned south toward the end of the year.

Consumers have hesitated to buy homes as interest rates have risen and inventory has remained tight. Housing starts in December slowed to the lowest level in more than two years.

Not counting aircraft, which saw a big bump from Boeing’s sales toward the end of the year, new manufacturers orders which peaked last summer have been sliding since.

Faced with a tumbling stock market and a federal government that appeared headed for a shutdown in December, measures of consumer and business sentiment drooped markedly in December. Those “soft” indicators won’t factor into the calculation of GDP, but December’s large drop in retail sales will — even if it turns out to be a fluke that’s revised away later, as many economists expect.

Of course, even a number between 1.8% and 2.4% would be respectable; the quarterly average over the past two years has been 2.3%. But most forecasts expect growth to slow down further toward the end of 2019 as the economy maxes out on available workers and the effects of last year’s tax cuts and government spending wear off.