US economic growth unexpectedly slows in final quarter

America’s economic output grew more slowly than previously expected in the final quarter of 2018, at an annual rate of 2.2 per cent, figures released today showed.

The 2.2 per cent figure, which amounts to 0.55 per cent GDP growth in the final quarter compared to the previous quarter, was 0.4 percentage points lower than the US’s Bureau of Economic Analysis (BEA) had estimated last month.

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The new figure, released by BEA today, “is based on more complete source data” than its previous estimate, the bureau said, and still remains one of the highest growth rates among the world’s biggest economies. The UK economy grew by 0.2 per cent in the three months to January, the Office for National Statistics said earlier this month.

The US’s fourth quarter annual GDP growth rate was considerably lower than the 3.4 per cent annual growth rate registered in the previous quarter. The revised figures bring US GDP growth to 2.9 per cent for 2018, up from 2.2 per cent in 2017, according to BEA data.

Personal consumption expenditure growth also slowed, growing at 1.5 per cent in the fourth quarter compared to the quarter three. The previous three growth figures for the year were 1.6 per cent, two per cent, and 2.5 per cent.

The data will contribute to the debate on the direction of the US Federal Reserve’s interest rates decisions. A slowdown in growth and consumer spending is the natural result of the Fed’s interest rates rises over the last two years.

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However, the Fed signalled earlier this month that it would hold rates at their present level longer than previously thought, citing slowdown in America and an uncertain global economic environment.