GDP Grows Above-Forecast 2.6 Percent as Business Spending Picks Up

GDP Grows Above-Forecast 2.6 Percent as Business Spending Picks Up

GDP Grows Above-Forecast 2.6 Percent as Business Spending Picks Up

Growth in consumer spending, which accounts for more than two-thirds of US economic activity, increased at a still strong 2.8 percent rate in the fourth quarter. He'll probably have much less to say about the new data, released this morning.

The U.S. economy expanded at a 2.9 percent pace a year ago, the Commerce Department reported Thursday, a strong rate but just shy of President Trump's goal of 3 percent.

For the full year, GDP grew by 2.9% - just shy of President Donald Trump's 3% target - compared with 2.2% in 2017.

Gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter after advancing at a 3.4 percent pace in the July-September period. It's a perfectly respectable number, indicative of a healthy economy. Economists polled by Reuters had forecast GDP rising at a 2.3 percent rate in the fourth quarter.

And in the final three months of the year, areas that had seen a post-stimulus boost appeared to be slowing: businesses investment in factory building slowed to its lowest level in a year, and non-defence government spending contracted by 5.6%, its biggest decrease in five years.

The economic expansion, now in its 10th year, is the second-longest on record.


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.

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

Thursday's GDP report from the Commerce Department had been delayed by a month because of the government shutdown.

The Commerce Department had to delay this report because of the partial government shutdown that furloughed many employees who work on key economic data collection and calculation.

Net exports subtracted 0.22 percentage point from GDP growth during the quarter following a 1.99-point reduction in the prior period. That weakness was offset somewhat by a gain in business investment and less of a drag from trade. Inventory investment added 0.13 percentage point to GDP growth last quarter after contributing 2.33 percentage points in the prior period. Homebuilding has been weighed down by higher mortgage rates, land and labor shortages as well a tariffs on imported lumber.

Within that category, spending on structures fell 4.2 percent, the biggest drop in a year, a slowdown that may partly reflect falling oil prices.

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