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Economics Gazette

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November 20, 2019

US economic growth slowed in Q4 2016

US economyThe US economic growth slowed more than expected in the last quarter of 2016. The trade has its biggest pressure on increase in six years, and consumer spending are more moderate. The business investment is accelerating and this could be a harbinger of faster expansion in 2017.

The gross domestic product grew by 1.9% yoy during the period from October to December 2016, after the previous quarter there was an increase in the amount of 3.5% yoy, according to data of the Ministry of Commerce. The median forecast of economists was for a growth of 2.2%. The consumer spending, which is the largest part of the economy, grew by 2.5%, meeting the analysts expectations.

In 2016, the US economy grows by 1.9%, which is about average levels for the current economic expansion. The first reading of the data confirms that household purchases have a leading role, but that business investment grow faster. The strong labor market and optimism among consumers and companies for the policies of President Donald Trump will likely continue to drive growth through 2017. The forthcoming revisions of GDP data are in February and March.

According to forecasts the growth of the US economy will be 2.3% this year and next year.

The net exports erase 1.7 percentage points of growth between October and December, which is the biggest weight in the second quarter of 2010. The US trade deficit expanded in the third quarter after a jump in exports of soybeans during the previous period. The exports soybeans helped to GDP growth in the third quarter.

In the last three months of the year the US economy is supported by business spending on equipment rose by 3.1% and this is the first increase in five quarters ago. The accumulation of stocks added the largest contribution to growth from the beginning of 2015, and construction gives its biggest positive momentum in a year. Government spending accelerate and grow by 1.2%.

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