United States economic growth continues to slow

Economic Growth Falls Short of Trump’s Target — or Maybe Just Beats It

Economic Growth Falls Short of Trump’s Target — or Maybe Just Beats It

"I think the economy will be steadily throttling back over the next two years", said Mark Zandi, chief economist at Moody's Analytics.

It expanded at a 2.6 percent annualized rate in the fourth quarter, a slowdown from the 3.4 percent growth in the third quarter.

The US economy kicked into high gear previous year, in the wake of sweeping tax cuts, but slowed in the final months, suggesting the boom had begun to fade, according to government data released today. The government says that slower consumer spending was the biggest factor in the slowdown. "As the stimulus fades and the lagged impact of past monetary tightening continues to feed through, we expect GDP growth to slow to 2.2 percent this year".

In a separate report Thursday, the government said that applications for unemployment benefits, a reflection of layoffs, rose by 8,000 last week to a seasonally adjusted 225,000.

Looking ahead, economists predict a sharply slower first quarter, thanks to the government shutdown, rising gasoline prices and unresolved trade issues, with growth continuing at at around 2 percent in the near future. Still, surveys and gauges such as Treasury yields indicate chances of a recession have increased in recent months while remaining unlikely for 2019.

United States economic growth continues to slow

Excluding the volatile trade and inventories components of GDP, final sales to domestic purchasers increased at a 2.6 percent pace following 2.9 percent.

In addition, most manufacturing measures softened in January and February, and motor vehicle demand has eased.

The increase in consumer spending followed the third quarter's 3.5 percent gain. Many are forecasting that growth this year will slow to around 2.2 percent and to weaken further in 2020. Drivers included health care, financial services and insurance, and other nondurable goods and services, while spending on food services and accommodations fell.

Defence spending grew 3.4%, the biggest increase in nine years. The 35-day government shutdown shaved an estimated 0.1 percentage point from growth in the fourth quarter.

The weak United States housing sector, which has seen falling sales and slowing construction, also shrank 3.5%, its third quarterly contraction in a row. With consumer spending slowing, some of the imports ended up in warehouses, accelerating the pace of inventory accumulation.

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