Published: Fri, March 31, 2017
Entertainment | By Alexander Flowers

US economy grew at 2.1 percent rate in Q4

US economy grew at 2.1 percent rate in Q4

US economic growth slowed less than previously reported in the fourth quarter as robust consumer spending spurred the largest increase in imports in two years.

The Commerce Department reports that for all of 2016, real gross domestic product (GDP) increased 2.0%, compared with an increase of 1.9% the previous year.

The median forecast expected GDP to come in at a 2.0% annualized pace, up from 1.9% in the first two estimates.

Data such as trade, consumer and construction spending suggest the economy struggled to regain momentum early in the first quarter.

For the final quarter of a year ago, GDP expanded at an annual rate of 2.1%, up a tad from the 1.9% reported in the second look at the numbers. That came in at an anemic 1.6 percent, the worst showing in five years. The upward revision for the final quarter was driven in part by a stronger personal consumption spending, which grew 3.5% compared to the third quarter, 0.5 points higher than the prior estimate.

The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE and to private inventory investment that were partly offset by downward revisions to nonresidential fixed investment and to exports.

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The moderate economic expansion poses a challenge to President Donald Trump, who has vowed to boost annual growth to 4 per cent by slashing taxes, increasing infrastructure spending and cutting regulations. Private economists, however, believe the impact of Trump's stimulus efforts will be even smaller.

For the fourth quarter, the government revised its estimate for consumer spending, which accounts for two-thirds of economic activity, to a growth rate of 3.5 per cent from a previous estimate of 3 per cent.

Economists polled by Reuters had expected fourth-quarter GDP would be revised up to a 2.0 per cent rate. It was previously reported to have risen at a 3.0 percent rate.

Real GDP grew at 1.6% in 2016, a slower pace than the 2.6% rate in 2015. A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 3,000 to a seasonally adjusted 258,000 for the week ended March 25.

Some increase in demand was due to imports, which were up by 9% instead of the 8.5% increase that was reported in February.

For all of 2016, the economy grew 1.6 percent, the slowest pace since 2011.

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