The U.S. economy grew at a 1.9 percent annual pace in the last quarter of 2016, according to revised Gross Domestic Product data published by the Bureau of Economic Analysis Tuesday morning.
Tuesday’s report disappointed investor expectations, which were for an upward revision to 2.1 percent.
Consumer spending was revised up to a strong 3 percent, but that increase was offset by lower government spending and business investment than previously thought, leaving the total growth rate unchanged at 1.9 percent.
Growth slowed significantly to end the year, after a 3.5 percent growth rate in the third quarter. Nevertheless, the second half was significantly stronger than the anemic first half of the year.
The fourth quarter’s weak performance left the growth rate for the year, the last of President Obama’s presidency, at 1.6 percent, the slowest since 2011.
Yet, underlying economic growth was probably not as week as the headline 1.9 percent rate in the fourth quarter. Net exports cut 1.7 percentage points off the growth rate, thanks in large part to a reversal of massive soybean shipments out of the U.S. in the third quarter. Domestic demand for goods and services, however, was stronger than overall growth, with sales to domestic buyers growing at 3 percent annually.
Steven Ricchiuto, an economist for Mizuho, said that Tuesday’s report would likely bring estimates for first-quarter 2017 GDP growth to around 2 percent.
President Trump has aimed for raising economic growth to 3 percent or 4 percent on a sustained basis, a target that many economists think is out of reach, given slowing U.S. population growth.
The GDP data is adjusted for seasonal variations.
