US Economy Slows Sharply, Fourth Quarter Growth Revised Down to 0.7 Per Cent

The United States’ economic growth slowed more sharply than anticipated in the fourth quarter of the previous year after the government revised downward several major components of the economy.

The Bureau of Economic Analysis of the US Department of Commerce reported that the nation’s gross domestic product grew 0.7 per cent annually in the fourth quarter. This figure is considerably lower than the initial estimate of 1.4 per cent.

Economists surveyed by Reuters had previously expected the growth figure to remain unchanged at 1.4 per cent.

The comparison with the previous period shows a substantial deceleration. The downward revision in growth came principally from corrections to consumer spending and business investment. The government also lowered its estimates for public sector expenditure and export growth.

Lower government spending stemmed primarily from infrastructure projects undertaken by state and local governments. The economy was further pressured by the closure of certain federal government activities that lasted 43 days in the previous year—the longest shutdown in US history.

Other indicators measuring the strength of domestic demand also showed deceleration. Final sales to private domestic purchasers recorded annual growth of 1.9 per cent. This indicator does not include contributions from government, foreign trade, and inventory changes. This figure is lower than the initial estimate of 2.4 per cent.