Economic growth slowed to end 2016, the Bureau of Economic Analysis reported Friday, but still remained stronger than earlier in the year.
Adjusted for inflation, U.S. gross domestic product grew at a 1.9 percent annual rate to end the fourth quarter, the bureau reported, below economists’ expectations and down from a robust 3.5 percent clip the quarter. The bureau adjusts GDP growth rates to account for seasonal variations.
For the year, GDP grew at 1.6 percent, the slowest rate since 2011.
Trade proved to be a drag on growth in the fourth quarter, with net exports shaving 1.7 percentage points off of the growth rate. Net exports have been given new prominence in the public discourse by President Trump, who has focused in his first days in office on the U.S. trade deficit with Mexico.
The big turnaround in trade partly represents payback from the third quarter, when massive sales in soybeans powered strong export growth.
Setting aside trade, however, other indications from the report were more favorable. It appears that consumers’ demand for goods and services held up, with sales to U.S. consumers and businesses growing at a stronger 2.8 percent rate. Home sales made a strong contribution to overall growth, after providing a drag in recent quarters.
“The U.S. economy was in decent, if unspectacular, shape at the end of 2016,” commented Gus Faucher, deputy chief economist for PNC.
Republicans, however, did not hesitate to use the disappointing report to get in one more dig at former President Obama.
“Today’s GDP report rounds out another year of disappointingly slow economic growth,” said Kevin Brady, the chairman of the House Ways and Means Committee. “As a result of President Obama’s higher taxes, bigger government, and one-size-fits-all regulations, our economy has grown by less than 2 percent annually—an abysmal rate that marks the worst economic recovery since World War II.”
President Trump has set a goal of 4 percent growth. Friday’s report underscores the difficulty of reaching that goal.
Friday’s report is a first estimate of GDP, and will be revised twice more in upcoming months.
