US economic growth slows to 1.9% in fourth quarter

The Dollar Business Bureau

The U.S. economy grew at an annual rate of just 1.9% in the last three months of 2016, slowing down considerably from 3.5% growth in the third quarter of last year, and dragged down by a significant increase in the country’s trade deficit.

The Commerce Department said Friday the 2016 gross domestic product (GDP) growth overturned in the last quarter to register its weakest performance in five years.

Overall, US economy grew 1.6% in 2016, worst since 2011 and down from 2.6% in 2015.

For the fourth quarter, exports, which were earlier temporarily strengthened by a surge in sales of soybeans to Latin America, came down. Meanwhile, imports escalated to 8.3%, the biggest gain in the last two years.

Inflation rose to a 2.2% annual pace in the fourth quarter, the highest since 2012. Consumer spending, accounting for 70% of economic growth, fell to a growth rate of 2.5% in October-December from a 3% gain in July-September 2016. Residential construction, after it fell for two straight quarters, rebounded in the fourth quarter, growing at an annual rate of 10.2% while government spending grew at 1.2%.

President Donald Trump has set an ambitious goal of doubling growth through tax cuts, deregulation and higher infrastructure spending.

Economists, at the International Monetary Fund, predicted US’ GDP to grow at 2.3% this year and 2.5% in 2018, on the back of Trump’s announced economic program of tax cuts, regulatory relief and higher infrastructure.