U.S. economic growth in the fourth quarter was unrevised, growing at a pace slower than expected, despite with robust consumer spending. Gross domestic product rose at a 1.9 percent annual rate in the fourth quarter as previously reported, the Commerce Department said on Tuesday. Economists had expected economy to expand 2.1 percent in the financial three months of 2016.
Consumer spending, which accounts for more than two-thirds of U.S. GDP, showed strong growth. The report said consumer spending was revised to a 3.0 percent growth from previously estimate of 2.5 percent. However, the downward revisions to business and government spending offset the robust growth in consumer spending.
“Real consumer spending was revised up 0.5ppt to 3.0% led by stronger spending on household services,” Neil Dutta, the head of US economic research at Renaissance Macro, said in a note following the release. “However, the growth was almost entirely in medical care services. This upward revision was good for a 0.7ppt contribution to GDP, up 0.5ppt from the initial estimate.”
The economy grew 3.5 percent in the third quarter and had a 1.6 percent growth rate for all of 2016. This marked the worst performance since 2011.
However, people are expecting that President Donald Trump’s fiscal stimulus plan, including tax cuts, infrastructure spending and less regulations, will help boost the economy. Investors await for President Trump’s speech to Congress on Tuesday night, which is expected to focus on its tax reform plans.