(CN) – U.S. economic growth slowed during the final three months of 2016, closing out a moribund year dominated by a chaotic presidential contest and uncertainty over Britain’s departure from the European Union.
The Commerce Department’s Bureau of Economic Analysis said Friday that gross domestic product grew at an annual rate of just 1.9 percent in the October-December period, a slowdown from 3.5 percent growth in the third quarter.
Gross Domestic Product is considered the broadest measure of a nation’s economic health. It represents the total dollar value of all goods and services produced over a specific time period.
For all of 2016, the economy grew at a rate of 1.6 percent — the worst showing since 2011 and down from 2.6 percent in 2015.
President Donald Trump has set a goal of doubling growth through large tax cuts, the elimination of “more than 70 percent of regulations,” and a significant boost to infrastructure spending.
However, at the end of his first week in office, he has offered little in the way of specifics and most economists suggest that a sustained annual growth rate approaching 4 percent will be hard to achieve in the face of economic headwinds including slow growth in the jobs market.
Still, given that the president has the benefit of a Republican-led Congress, much of his economic program is expected to be enacted.
The Commerce Department said the biggest factor contributing to the slowdown at the end of last year was the nation’s widening trade deficit.
Exports, which had been strong, flagged, and imports surged. As a result, trade knocked 1.7 percent from growth in the fourth quarter.
During the third quarter, trade was actually a modest positive, adding 0.9 percentage point to growth.
A higher trade deficit subtracts from economic growth because it means more production is being supplied from abroad.
Consumer spending, which accounts for about 70 percent of GDP, also slowed in the fourth quarter, dropping from 3 percent in the third quarter to 2.5 percent.
One bright spot in Friday’s report was business investment spending, which rose to a 2.4 percent rate — its best showing in a year.
Another positive development was the rebound in residential construction. It had fallen in the second and third quarters of the year, it actually surged 10.2 percent in the fourth quarter.
State and local government spending also grew in the fourth quarter — at a 1.2 percent percentage rate — off-setting a slowdown in federal government spending.