The Bureau of Economic Analysis said today that it’s estimate for fourth quarter economic growth in the United States was unchanged at 1.9% annually from the third quarter. Despite no revision to the numbers, economists had expected an upward revision to about 2.1%.
The full year 2016 growth was 1.6%. That matched 2011 as the slowest US full-year growth since the end of the recession. Average growth between 2010 and 2016 has been 2.1%.
GDP contributions are frequently broken into numbers for private consumption, private investment, government spending, and net trade. Fourth quarter growth was mostly affected by weak trade numbers, which subtracted 1.7% from GDP growth despite consistent consumer spending and an uptick in business investment. One cause of the weak trade numbers is an exceptionally strong dollar, which has risen against other major currencies as the Federal Reserve finally embarks upon interest rate increase while other Central Banks are not as eager to begin tightening. The election of Donald Trump also caused a dollar rally, with the dollar index increasing by about 6% in the fourth quarter.
Longer-term business investment has been what has dragged down growth, even while consumer spending has remained reasonably strong. For all of 2016, business investment declined again, subtracting 30 bps from growth. However, in the fourth quarter investment added 150 bps to GDP, an encouraging sign for the United States’ economy heading into 2017.
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