WASHINGTON, (Reuters) – – U.S. economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the trump administration's 3 percent annual target, and corporate profits failed to rise for the first time in more than two years.
FILE PHOTO: Technicians build LEAP engines for jetliners at a new, highly automated General Electric (GE) factory at Lafayette, Indiana, U.S. on March 29, 2017. REUTERS / Alwyn Scott / File Photo
Gross domestic product increased at a 2.2 percent annualized rate, the Commerce Department said on Thursday in its third reading of fourth-quarter GDP growth. That was down from the 2.6 percent pace estimated in February.
The economy grew at a 3.4 percent pace in the third quarter. The expansion will be the longest on record in July.
The revisions to the fourth-quarter GDP reading reflected markdowns to consumer and business spending, as well as government outlays and investment in homebuilding.
For all of 2018, the economy has grown 2.9 percent as previously reported, despite the White House's fiscal stimulus of $ 1.5 trillion in tax cuts and more government spending. Growth last year was the strongest since 2015 and was 2.2 percent logged in 2017.
Compared to the fourth quarter of 2017, the economy expanded 3.0 percent, revised down from the 3.1 percent reported last month. President Donald Trump has highlighted the year-on-year growth figure as proof of fiscal stimulus, which has contributed to a swelling of the federal government's deficit.
Trump likes to showcase the economy as one of the biggest accomplishments of his term, declaring last July that his administration had "attained an economic turnaround of historic proportions." On the campaign trail, Trump boasted he could boost annual GDP growth to 4 percent, a goal analysts always said what unrealistic given low productivity, among other factors.
Economists polled by Reuters had forecast.
There are signs the slowdown in growth persisted early in the first quarter, with retail sales rising modestly and manufacturing production and homebuilding tepid.
That was underscored by weak profits in the fourth quarter. After tax corporate profits were unchanged for the first quarter of 2016, after growing at a 3.5 percent rate in the third quarter. S & P 500 profits fell to $ 34.2 billion in the fourth quarter.
The economy is facing headwinds from the fading stimulus, slowing global growth, Washington's trade was with China and uncertainty over Britain's departure from the European Union.
This contributed to the Federal Reserve's decision last week to bring its three-year monetary policy to an abrupt end. The U.S. This is the year in which borrowing costs four times in 2018.
Growth in consumer spending, which accounts for more than two-thirds of US dollars. economic activity, increased at a 2.5 percent rate in the fourth quarter instead of the previously reported 2.8 percent pace. Consumer spending remains underpinned by a strong laboratory market.
Growth in business spending on equipment 6.6 percent pace from 6.7 percent rate. Investment in intellectual products was down 10.7 percent from the 13.1 percent pace reported in February.
Investment in residential construction was revised to show 4.7 percent, instead of a 3.5 percent rate, marking the fourth straight quarterly decline.
Government investment fell at a 0.4 percent rate, instead of growing at a 0.4 percent pace as previously reported.
But exports were revised to show them rising at a 1.8 percent pace instead of the 1.6 percent reported last month. Imports were revised down, leading to a smaller trade deficit that cut one-tenth of a fourth-quarter GDP growth.
The trade deficit was previously estimated to have been subtracted 0.22 percentage point from output. Inventories increased at $ 96.8 billion in the fourth quarter instead of the $ 97.1 billion reported last month.
Inventory investment added one-tenth of GDP to GDP growth.
Reporting by Lucia Mutikani; Editing by Andrea Ricci