US economy cools in Q4, falling below Trump goal
WASHINGTON: The world’s largest economy slowed in the final quarter of 2017, bringing US GDP expansion for the year below President Donald Trump’s ambitious three percent target, according to data released Friday. The slowdown underscored the difficulty the administration faces in making good on an emblematic pledge.
The White House believes the massive tax cuts passed last month will energize the economy and offset the $1.5 trillion cost of the tax overhaul, but economists say this is not likely and any growth bump will be modest. After two quarters of expansion above three percent, GDP slowed to 2.6 percent in the OctoberDecember period, held down by a big jump in imports and falling business inventories, according to the first growth estimate from the Commerce Department.
That was slower than analysts forecast and meant growth for the year was 2.3 percent, better than the 1.5 percent gain in 2016 but well below 2015’s 2.9 percent. But the result is subject to revision as more data become available. Analysts highlighted the positive signs within the report, including strong spending and investment, but cautioned that growth in the first quarter of this year could be below trend, as in recent years.
“In short, growth was a bit less than generally expected, disappointing hopes for a third consecutive 3 percent-or-better quarter for the first time since 2005, but the details were stronger than the headline figure,” Jim O’Sullivan of High Frequency Economics said in a research note. Trump rose to power a year ago on a nationalist economic agenda, seeking to energize growth to three percent or even four percent by revitalizing manufacturing and attacking bilateral trade deficits while slashing taxes and regulation and limiting immigration.
Making the case in Davos Making the case for his America First vision at the World Economic Forum in Davos, Switzerland on Friday, Trump said praised “the resurgence of a strong and prosperous America.
“America is open for business, and we are competitive once again,” he said. The GDP data showed growth in the fourth quarter was bolstered by consumer spending, home buying, and business investments. Exports also had a good quarter as the US dollar continued to weaken, gaining 12.6 percent compared to the prior quarter, the largest jump in four years.
But imports, which subtract from GDP, rose an even faster 13.9 percent, the largest quarterly increase in more than seven years. Durable goods orders were another bright spot for the quarter, with sales of large, factory-made items rising by 8.2 percent, the biggest quarterly gain in 14 years.