US economy revises down Q4 growth rate to 2.2 percent

US economy revises down Q4 growth rate to 2.2 percent”

The U.S. economy did not grow as much in the fourth quarter of previous year as first believed, new figures showed Thursday.

The Commerce Department now says the economy grew at an annual rate of 2.2 percent in the fourth quarter of a year ago. That revision compares to the 2.6 percent pace estimated in February. Growth in the third quarter was 3.4 percent.

The revisions to the fourth-quarter GDP reading reflected markdowns to consumer and business spending, as well as government outlays and investment in homebuilding. "The impact of tax cuts is fading, but the underlying trend in activity still points more to a moderation in growth rather than a recession". Growth in 2018 was the strongest since 2015 and was an acceleration from the 2.2 percent logged in 2017.

The report also gave the first read on business earnings in the fourth quarter. On Thursday, March 28, the Commerce Department issues the final estimate of how the US economy performed in the October-December quarter. Trump likes to showcase the economy as one of the biggest achievements of his term, declaring last July that his administration had "accomplished an economic turnaround of historic proportions".

On the campaign trail, Trump boasted he could boost annual GDP growth to 4 percent, a goal analysts said was always unrealistic given low productivity, among other factors.

United States economic growth was revised sharply lower for the final three months of 2018, down to 2.2 percent rather than the 2.6 percent originally reported, the government said Thursday.

There are signs the slowdown in growth persisted early in the first quarter, with retail sales rising modestly and manufacturing production and home building tepid.

Federal data confirms weak profits in the fourth quarter of 2018.

Corporate profits fell by $9.7 billion in the fourth quarter, after an increase of $78.2 billion in the third quarter, but finished the year up 7.8 percent.

Concerns about trade negotiations with China, a slowing global economy and the start of a partial government shutdown resulted in steep stock selloffs in the final months of 2018.

Rate projections released after the policy meeting showed that 11 of the 17 officials who participated in setting interest-rate policy didn't predict any rate hikes this year.

USA protectionist trade policy toward its major trading partners coupled with a sluggish growth pace of the world GDP have been cited as the main reasons for the slowdown.

us economic growth cooled by more than initially reported last quarter on revisions to consumer and government spending, signaling mounting challenges to the expansion as it nears a record duration.

While the expansion has moderated, the labour market has remained in generally solid shape despite some recent gyrations.

In a separate report Thursday, the government said that applications for unemployment benefits, a reflection of layoffs, fell by 5,000 last week to a seasonally adjusted 211,000. Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. That was the weakest pace since the fourth quarter of 2017 and followed a 0.9 percent rise in the third quarter. This was countered by an upward revision to net exports, whose drag on the fourth quarter GDP was lowered by one-tenth.

The trade deficit was previously estimated to have subtracted 0.22 percentage point from output.

Compared to the fourth quarter of 2017, the economy expanded 3.0 percent, revised down from the 3.1 percent reported last month.

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