Economic Growth Dropped to Three-Year Low in 2019

The waterfront in Portland, Maine. (AP Photo/Robert F. Bukaty, File)

(CN) – The U.S. economy grew at a rate of 2.1% in the last three months of 2019, while growth for the whole year fell to the lowest level since 2016.

The 2.3% annual increase in the gross domestic product last year fell below the 2.9% gain in 2018 and the 2.4% increase in 2017. It’s the lowest mark since the 1.6% gain in 2016.

The GDP, a primary indicator of economic health that measures output of goods and services, grew at the same rate in the fourth quarter as the three months before, according to a Commerce Department report released Thursday.

The highest mark for last year came in the first quarter, when the GDP grew by 3.1%.

The yearly increase for 2019 falls below the Trump administration’s projection of 3% annual GDP growth, which would be well above the 2.2% average annual rate seen during the current economic expansion. The economy entered its 11th consecutive year of growth last summer, the longest streak on record.

Accounting for most economic activity, consumer spending increased by 1.8% from October to December, compared to 3.2% in the third quarter and 4.6% in the second quarter.

Business investments continued to fall with a 1.5% decrease in the third quarter. The investment downturn could be seen as a sign of uncertainty caused by President Donald Trump’s trade war with China and a slowing global economy, but some are hopeful investments will pick back up after the two countries inked the first phrase of a trade agreement this month.

Josh Bivens, research director at the Economic Policy Institute, said in a statement Thursday that Trump’s 2017 Tax Cuts and Jobs Act “seems like an unambiguous policy failure” in light of the GDP slowdown.

“All in all, today’s data shows an economy that is far from overheating and with room left to spur growth through more public spending,” he said. “It also shows the failure of the 2017 tax cuts to durably lift growth.”

Economists are predicting further slowdown in 2020, with a GDP increase of about 1.7%. The Chinese coronavirus and U.S. presidential elections are two factors that could hinder economic growth this year.

On Wednesday, the Federal Reserve declined to lower interest rates after doing so three times last year to help offset a global slowdown and effects from the trade war. Trump has blamed the central bank for the slower rate of growth.

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