US GDP Growth Slows, Hits 1.9 Percent In Q4

The United States saw a slowdown in its economic growth, as measured by the fourth quarter, coming in at a 1.9 percent rate, The Wall Street Journal reported Friday (Jan. 27). That’s a marked deceleration from the 3.5 percent rate seen in the third quarter.

And it’s half the rate that newly installed President Donald Trump has vowed to nudge the economy toward through a series of tax cuts and domestic infrastructure projects. The most recent tally falls just a hair below the 2 percent rate that has been the hallmark of a slow expansion — in fact, it is the slowest prolonged pace since the second World War. The 1.9 percent growth was a return to steady-state levels logged in 2015.

Beneath the headline numbers, despite steady growth in consumer spending, to the tune of 2.5 percent annualized, trade deficits helped stymie growth overall, subtracting as much as 1.7 percentage points and overwhelming the percentage point from private inventory gains submitted by businesses. That was broken down further into fixed nonresidential investment, gaining 2.4 percent annually in the fourth quarter. Companies focused their spending on equipment and research and development initiatives.

Paul Ashworth, U.S. economist at Capital Economics, said that observers should be “wary of reading too much into the slowdown in GDP growth … because the temporary spike boosted the [3.5 growth rate, annualized] and was a drag on the latter [1.9 percent just announced].”

Similarly, state and local governments pushed their own spending higher.

Within consumer spending, there was growth of nearly 11 percent in spending on durable goods and big-ticket items such as autos.