US GDP growth revised down sharply to 2.2% in Q4

30 March, 2019, 22:29 | Author: Mary Valdez
  • The US economy expanded by slightly less than expected in the fourth quarter of 2018

This metric grew at a 3.5 percent rate in the third quarter of 2018.

The U.S. economy grew somewhat more slowly at the end of a year ago than initially thought.

Winnebago Chief Executive Michael Happe said in an earnings call earlier this week that the sector has come under pressure from higher product prices due to increased tariff and material costs, rising short-term interest rates in the second half of 2018 and financial-market volatility.

"I would say the fourth-quarter reading on GDP growth confirms what we already expected", said Ben Herzon of Macroeconomic Advisers. "The strength of the labor market should be enough to postpone a recession for at least this year, but the margins are getting smaller, and it would not take much to tilt growth into negative territory".

The increase in the gross domestic product, the economy's total output of goods and services, was revised down from an initial estimate of 2.6 per cent growth in the fourth quarter, the Commerce Department reported Thursday. Growth in the third quarter was 3.4 percent.

For the full year, inflation-adjusted GDP grew by 2.9 percent, unchanged from the previous estimate. Annual growth still missed the White House's 3 percent target despite the massive fiscal stimulus.

Compared to the fourth quarter of 2017, GDP rose 3.0 percent, revised down from the 3.1 percent reported last month.

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President Donald Trump and other administration officials highlighted last year's GDP performance as evidence that the administration's policies of tax cuts, deregulation and tougher trade enforcement were working. Trump likes to showcase the economy as one of the biggest achievements of his term, declaring last July that his administration had "accomplished an economic turnaround of historic proportions".

The economy's 2.2 per cent annual growth rate last quarter, though solid, was the slowest since a similar 2.2 per cent pace in the first quarter of 2018.

Economists said the revisions to the Q4 GDP reading reflects weaker consumer and business spending, as well as lower government outlays and investment in homebuilding.

Unfortunately, the drop-off between the third and fourth quarters was steeper than expected. USA financial markets were little moved by the GDP report.

The U.S. economy grew at a slower rate than initially estimated in the fourth quarter, closing a year of strong economic growth on a softer note as a key measure of U.S. corporate profits weakened.

This was countered by an upward revision to net exports, whose drag on the fourth quarter GDP was lowered by one-tenth.

But economic data is not in his favor: business confidence, consumer spending and home construction have all slowed in recent months.

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