US economy slows down
washington — The US economy slowed less than expected in the fourth quarter amid solid consumer and business spending, leaving 2018 growth just shy of the Trump administration’s 3 per cent annual target.
The Commerce Department’s gross domestic product (GDP) report on Thursday offered the latest assessment of the impact of President Donald Trump’s economic policies, including deregulation, tax cuts, increased government spending and tariffs aimed at securing more favourable trade deals.
Trump has touted the economy as one of the biggest achievements of his presidency and declared last July that his administration had “accomplished an economic turnaround of historic proportions.”
Gross domestic product increased at a 2.6 per cent annualised rate in the fourth quarter after expanding at a 3.4 per cent pace in the July-September period. The economy grew 2.9 per cent in 2018, powered by the White House’s $1.5 trillion tax cut and increased government spending. It was the best performance since 2015 and better than the 2.2 per cent logged in 2017.
Economists polled by Reuters had forecast GDP rising at a 2.3 per cent rate in the fourth quarter. Despite the economy’s strong performance in the last quarter and in 2018, there are indications activity is softening, with most manufacturing measures weakening in January and February. The labour market is also showing signs of cooling, with a report from the Labor Department on Thursday showing the number of Americans drawing unemployment benefits rising to a 10-month high in the week ended February 16.
The economy is slowing as the boost from fiscal stimulus fades. Growth is also being restrained by a trade war between the United States and China.
The slowdown comes at a time when the economy’s outlook is also being clouded by signs of weakening global demand and uncertainty over Britain’s departure from the European Union.
Growth in consumer spending, which accounts for more than twothirds of US economic activity, increased at a still strong 2.8 per cent rate in the fourth quarter. Consumer spending grew at a robust 3.5 per cent rate in the third quarter.
Trade tensions with China could constrain the economy for a while. US Trade Representative Robert Lighthizer told lawmakers on Wednesday that Washington’s issues with China were “too serious” to be resolved with promises from Beijing to buy more American goods and a threat of higher tariffs could loom over trade with China for years.