WASHINGTON – The United States’ economy grew at an annual clip of 2.6 percent in the fourth quarter of 2017, down from a 3.2 percent growth rate between July and September, the Commerce Department said Friday.
This initial reading, the first of three estimates of gross domestic product (GDP) growth for the October-December period, came in below economists’ expectations for a 3 percent expansion.
Growth was driven by a sharp 3.8 percent increase in consumer spending, the fastest rise in that indicator since the fourth quarter of 2014.
Consumer spending accounts for roughly two-thirds of US economic activity.
By contrast, the widening of the trade deficit (the pace of growth in imports was double that of exports) and inventory depletion made the economic expansion less robust. Imports are subtracted in calculating GDP.
US President Donald Trump, who took office on Jan. 20, 2017, has vowed to bring about sustained economic growth rates of more than 3 percent annually in part through a sweeping tax overhaul he signed into law last month that lowers levies on US corporations and – to a lesser extent – many ordinary Americans.
The sustained economic improvement, including a drop in the unemployment rate to its lowest level in 17 years, prompted the Federal Reserve to raise its benchmark interest rate three times last year.
In December, the central bank hiked the federal-funds rate to its current range of between 1.25 percent and 1.5 percent.