• Category: News

US Economy Returns to Slow Growth With 1.9% Annual Pace Recorded

Official figures indicate that the US economy grew at a 1.9% yearly rate in the last quarter of 2016.

US Economy Returns to Slow Growth With 1.9% Annual Pace Recorded

The US growth rate of 1.9% recorded last year is slower than the 2.2% growth rate expected by market analysts and economists and well below the 3.5% growth rate experienced in last year’s third quarter growth rate .

This year, the overall GDP saw a 1.6% rise, the slowest growth rate witnessed since 2011 and is evidentially a decline from a year earlier when the economy grew at a rate of 2.6%.

A key component of Donald Trump’s campaign promises was to boost GDP growth up to 4% by promoting expenditure on infrastructure and facilitating tax cuts.

The year 2000, the peak of the dotcom boom, was the last time the US economy grew at a 4.1% rate.

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Increased consumer spending

Official reports indicate that in the last quarter of last year, consumer spending rose. However, the exports sectors witnessed a slowdown while the economy saw greater number of imports.

These latest figures are only preliminary estimates and are largely based on incomplete data. The full report will be available on 26 February.

According to Nancy Curtin, chief investment officer at Close Brothers Asset Management, this initial data underscored the effect of the tense political environment in Europe and US has had on the economic growth in the US.

She said, “The main concerns of the current US administration are the economy and job. The levels of growth that have been talked about seem very optimistic.”

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Caution over Trumponomics

However, she noted that the president has been in office for less than a week and important trade agreements with other countries such as the UK are yet to be determined it will be a little longer before the effects of Trumponomics are truly felt.

Paul Ashworth, chief economist at Capital Economics said that the slow economic growth should not be a cause of alarm given that last quarter of the year was largely influenced by fluctuations in exports.

He asserted, “We would be wary of paying too much attention to the slowdown in the growth of the US economy.”

Trump’s economic policies have boosted the stock market, which has seen the Dow Jones Industrial Average above 20,000, making history.

The recorded GDP growth of 1.6% puts UK’s growth ahead of the US with the UK reporting a 2% growth in the last quarter. The UK’s GDP also overtook Europe’s economic giant, Germany, which grew by just 1.9%.

On Friday of this week, Mr. Trump will be meeting UK Prime Minister Theresa May, a meet in which post Brexit trade issues are expected to take center stage.

Although the UK is required to fully leave the European Union to enter trade agreements with other countries, Mr. Trump is eager for a fast deal as soon as possible.


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