US Q4 GDP growth slows to 1.9% on wider trade gap

2016 PERFORMANCE WORST IN 5 YEARS

US ECONOMIC growth slowed sharply in the fourth quarter as a plunge in shipments of soybeans weighed on exports, but steady consumer spending and rising business investment pointed to sustained strength in domestic demand.

Gross domestic product increased at a 1.9 per cent annual rate, the commerce department said on Friday in its first estimate of fourth-quarter GDP. The economy grew at a 3.5 per cent annual rate in the third quarter.

The slowdown masked a surge in home building spending and a rebound in business investment on equipment after four straight quarterly declines.

The economy expanded 1.6 per cent for all of 2016, the worst performance since 2011, as it struggled with weak oil prices, a strong dollar and efforts by businesses to reduce a large inventory overhang.

US President Donald Trump vowed during last year’s election campaign to deliver 4 per cent annual GDP growth, largely on the back of a plan to cut taxes, reduce regulations and increase infrastructure spending.

“The details of the report were quite sound. The US economic expansion got its mojo back and the momentum appears to be carrying over into 2017,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

A measure of private domestic demand increased at a 2.8 per cent rate last quarter. Economic growth in the third quarter was driven in part by an outsized jump in soybean exports.