(CN) – The U.S. economy grew at a weak 1.9 percent rate in the fourth quarter — a significant slowdown from the 3.5 percent growth achieved just a quarter earlier.
The Commerce Department said Tuesday the deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports, an acceleration in imports, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, and an upturn in
state and local government spending.
The gross domestic product is the broadest measure of economic health,
The fourth quarter figure was unchanged from the first estimate a month ago, although some of the components were revised. The government found that consumer spending grew at a faster rate, but spending by state and local governments and businesses equipment purchases were weaker.
Growth for 2016 overall was just 1.6 percent, the poorest showing in five years. Since the recession ended in mid-2009, annual growth has averaged 2.1 percent, the worst performance for any recovery in the post-World War II period.
During his 2016 campaign for the White House, President Donald Trump repeatedly vowed to double economic growth to 4 percent or better.
He said his economic program of tax cuts, deregulation and increased spending in such areas as the military and infrastructure would boost the economy back to growth rates not seen on a sustained basis in decades.
Since then, Treasury Secretary Steven Mnuchin has tamped down on those expectations, saying he believes the Trump program would achieve growth 3 percent or better.
Mnuchin has also been reminding Trump supporters that in any event, the impact of Trump’s plan won’t likely be felt until sometime in 2018.
Most economists, meanwhile, are forecasting growth for this year of between 2 percent and 2.5 percent.
Trump is expected to unveil details of his economic plans before a joint session of Congress on Tuesday night.
On Monday the White House revealed his spending plan includes a $54 billion boost in military spending. The extra spending is intended for new aircraft, ships and fighters and will be paid for with $54 billion in cuts in domestic programs and foreign aid.
Tuesday’s report said consumer spending, which accounts for 70 percent of economic activity, grew at a rate of 3 percent in the fourth quarter, better than originally forecast.
But spending by state and local governments was revised lower to 1.3 percent growth, half the initial 2.6 percent estimate.
At the same time, spending by businesses on equipment was revised down to a 1.9 percent increase from the anticipated 3.1 percent rate, and the housing construction rate was pegged at 9.6 percent, rather than the expected 10.2 percent gain.
The release Tuesday was the second of three estimates the government releases for GDP performance each quarter.