U.S. economy likely to see its growth slow

US economic growth continues to slow

US Economic Growth in 2018 Misses Trump's 3 Percent Target

The U.S. economy slowed less than expected in the fourth quarter amid solid consumer and business spending, leaving 2018 growth just shy of the Trump administration's 3 percent annual target.

According to the Commerce Department, gross domestic product rose at a rate of 2.6% from October through December, surpassing expectations of 2.2% growth.

President Donald Trump has touted the economy as one of the biggest achievements of his term and declared last July that his administration had "accomplished an economic turnaround of historic proportions".

The business investment numbers were stronger than most expected, but more than two-thirds of the growth during the quarter came from intellectual property products like software and research and development, which involve less freight movement. Economists are forecasting that the economy grew about 2.9 percent in 2018, which would the best performance since 2015 and better than the 2.2 percent logged in 2017.

The release of the fourth-quarter GDP report was delayed by a 35-day partial shutdown of the government that ended on January 25, which affected the collection and processing of economic data.

However, growth slowed in the final three months of the year, according to the Commerce Department, similar to the fall in economic growth recorded by European Union countries in the fourth quarter.

It also said the fourth-quarter GDP growth estimate was "based on source data that are incomplete or subject to further revision by the source agency".

"We are moving back to a sustainable growth pace that we experienced during most of the Obama years", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

"Inventories could be more of a negative factor for future growth than we had anticipated", said Daniel Silver, an economist at JPMorgan in NY.

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"While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals", Federal Reserve Chairman Jerome Powell told the House Financial Services Committee at a hearing on Wednesday.

The US dipped to an annual rate of 2.6pc, slowing from 3.4pc in the third quarter and 4.2pc in the second.

In 2018, defence spending grew 3.4pc, the biggest increase in nine years.

Trade tensions with China could constrain the economy for a while.

The current expansion, now in its tenth year, is the second longest in USA history. -China trade dispute, strong dollar and weakening global demand restrained export growth.

A majority of the economists surveyed are concerned about the US administration's trade policies, and a lot of them also cautioned that the federal budget deficit could continue to grow. Government spending slowed, trade was a minor drag and inventories gave GDP a small boost. That was down from a 3.4 percent rate in the July to September period and a sizzling 4.2 percent pace from April through June.

Business spending on equipment accelerated in the fourth quarter from the prior period, growing at a 6.7 percent rate, after losing speed since the first quarter of 2018.

The weak housing sector, which has seen falling sales and slowing construction, also shrank 3.5 per cent, its third quarterly contraction in a row. Residential investment, which has been a consistent area of weakness throughout the year, declined for the fourth consecutive quarter at the end of 2018. Homebuilding has contracted since the first quarter, weighed down by higher mortgage rates, land and labor shortages as well a tariffs on imported lumber.

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