The US Commerce Department today confirmed a picture of sluggish growth in 2016, with the world’s largest economy growing at its slowest pace in five years. The updated figures left prior estimates unchanged. Official data showed consumers had spent slightly more than originally believed but this was offset by downward revisions in government spending and business fixed investment.
The figures come as President Donald Trump prepares to address a joint session of Congress today, with the world waiting for details on the new administration’s economic policy agenda. US gross domestic product grew by 1.6 per cent in 2016, down from 2.6 per cent in 2015 and the slowest pace recorded since 2011.
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The final quarter of the year saw the economy expand by 1.9 per cent, with falling exports helping bring the growth rate down from the third quarter’s considerably stronger 3.5 per cent. Analysts had been expecting an upward revision to 2.1 per cent for the fourth quarter.
Trump made economic revival a touchstone of his campaign and has pledged to return to four percent annual growth but he now faces the challenge of delivering on such promises. Treasury Secretary Steven Mnuchin last week pulled back from Trump’s growth targets, telling CNBC television network the new administration’s expansionary policies should lead to three per cent growth by the end of 2018. Jim O’Sullivan of High Frequency Economics said the news was pure disappointment, noting that the fourth quarter had been below average.
“Through the volatility, the trend has been a little better than two percent, he wrote in a client note.
“While weak by past standards, growth has been strong enough to bring down the unemployment rate.”