US GDP: Annual growth the slowest since 2016, government confirms
US GDP grew at an annualised rate of 2.1 per cent in the final quarter of 2019, the government confirmed today, a moderate pace that took annual growth to its lowest since 2016.
A rise in consumer and government spending and exports was partly offset by falling private investment, the US’s Bureau of Economic Analysis said.
The latest reading – the US released its first estimate last month – came as stock markets tanked around the world amid fears over the coronavirus, which traders think could hit the global economy hard.
The 2.1 per cent annualised US GDP growth rate was the same as in the third quarter of 2019, and took growth for the year overall to 2.3 per cent, its slowest since 2016.
The 2019 growth figure was below the 2.9 per cent growth seen in 2018 and considerably lower than the three per cent target the administration of US President Donald Trump had set itself.
Nonetheless, the US economy was the best performing of the G7 group of rich democracies in 2019.
“Despite weakness in both manufacturing and business investment, US gross domestic product chugged along,” said Richard Flynn, UK managing director at investor Charles Schwab.
Yet he warned that coronavirus could yet derail US and global economic growth, and questioned whether markets were accurately pricing the risk from the outbreak.
“The market may have been complacent in assuming containment of the coronavirus, as evidenced in the stock market’s behaviour.”
US equities have had a rocky week. The S&P 500 ended the day 0.4 per cent lower yesterday after it plummeted three per cent on Tuesday as coronavirus spread through Europe.
“There are still a lot of unknowns,” Flynn said. “If governments can manage to contain the coronavirus, and it follows a similar pattern to past epidemics tracked by the World Health Organization, the effect on markets could be relatively short-lived.”