The latest figures estimate real gross domestic product increased 1.9% in the fourth quarter, a fall on the previous quarter when growth was up by 3.5%, with the deceleration put down to a fall in exports and reduced federal government spending.
Growth in personal income also slowed in the last quarter of the year increasing $152bn, down on growth of $172.3bn in the third quarter, due to stalled growth in wages.
However, Ian Kernohan, economist at Royal London Asset Management, said it wasn’t all bad news, with employment levels higher and the number of jobless down.
He said: “This relatively slow expansion was still sufficient to drive employment levels higher and unemployment lower, leading to a pick-up in wage growth.
“Going forward, much will depend on the scale and timing of any fiscal stimulus by the new Trump administration, which could push US GDP growth to over 3% by 2018. We do not expect the Federal Reserve to raise interest rates again until May, when they will have greater visibility on the new administration’s plans.”
Overall, real GDP increased by 1.6 % in 2016, a reduction in the growth of 2.6% seen in 2015.
The slowdown was attributed to a downturn in private inventory investment, less consumer spending and a fall in state and local government spending with growth itself caused by more federal government spending and increasing exports.
