USA growth lags forecasts but inflation ticks up

USA growth lags forecasts but inflation ticks up

USA growth lags forecasts but inflation ticks up

The report said real gross domestic product increased by 2.6 percent in the fourth quarter compared to the 3.2 percent growth seen in the third quarter.

The economy grew 2.3% for the year, the Commerce Department said Friday. Consumption grew 3.8 percent in the quarter, the fastest growth in three years.

But the result is subject to revision by the Commerce Department as more data become available.

One big question mark for economic growth is Trump's trade policy.

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While the corporate income tax rate has been slashed to 21 per cent from 35 per cent and taxes for households have also been lowered, economists see only a modest boost to GDP growth as the fiscal stimulus is coming at a time when the economy is nearly at full employment. US growth is also affected heavily by economic global conditions, as the state of foreign countries changes demand for USA exports and foreign firms' interest in investing in the United States. "America is open for business, and we are competitive once again".

Consumer spending, which accounts for more than two-thirds of USA economic activity, increased at a 3.8 percent rate in the fourth quarter.

The hurricanes and storms in the third quarter had kept a lot of people at home, so they came out to stores in droves in the fourth quarter.

Imports, which subtract from GDP growth, increased at their fastest rate in more than seven years. Demand has also been buoyed by President Donald Trump's promise of hefty tax cuts, which was fulfilled in December when the Republican-controlled US Congress approved the largest overhaul of the tax code in 30 years.

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A major increase in imports at the end of the year - the biggest since 2010 - pushed down growth because it increased the USA trade deficit. But the economy was growing at a 3% pace or better for the previous six months. Many economists expect that the tax cuts could help boost growth this year, but that growth will gradually slip back to 2%, where it has hovered since the Great Recession.

Military plane sales rose 55.3 percent over November while civilian aircraft orders also gained, with a 15.9 percent increase.

Excluding the volatile transportation sector, durable goods sales were less pronounced, rising only 0.6 percent for the month.

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