US economy grew at faster pace in Q4 2017

WASHINGTON: The US economy grew significantly faster at the end of 2017 than previously reported, as consumer spending hit a three-year high and business investment rose, the government reported on Wednesday.

The rosier revised estimate for the October-December period was a modest shot in the arm for President Donald Trump, whose trade policies face stiff opposition at home and abroad and have sent shudders through global stock markets.

GDP grew 2.9% in the final three months of last year, 0.4 points higher than the prior estimate, the Commerce Department said. And that rate was significantly faster growth than analysts were expecting.

The third and final quarterly estimate, based on a fuller set of data, marked the third quarter in a row at or around Trump’s target of 3% annual growth. And the new estimate does not account for December’s sweeping US$1.5 trillion (RM5.8 trillion) tax cuts, which economists say should boost growth in the near term at least for a short time.

“Consumer spending appears to have had its strongest quarter in three years,” Oxford Economics said in a research note, adding that tax cuts and stronger government spending should fuel GDP in 2018.

But for all of 2017 the growth rate was unchanged at a modest 2.3%, faster than the 1.5% posted in 2016, but still well below Trump’s goal and the 2.9% expansion seen in 2015.

The Trump administration is counting on an acceleration of growth to pay for the December tax cuts, which are expected to swell the budget deficit and add to the mounting US sovereign debt. However, economists point to stagnating US productivity and a possible trade war as drags on growth, and warn the tax cuts will drive the Treasury deeper into the red. – AFP