The U.S. economy fell short of the Trump administration’s 3 percent annual growth target in 2018 despite $1.5 trillion in tax cuts and a government spending blitz, and economists say growth will only slow from here, APA reports quoting Reuters.
A better-than-expected performance in the fourth quarter pushed gross domestic product up 2.9 percent for the year, just shy of the goal, Commerce Department data showed on Thursday.
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.” On the campaign trail, Trump boasted that he could boost annual economic growth to 4 percent, a goal that analysts always said was unachievable.
“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. “With the tax cut impacts largely done with, it is hard to see how growth can accelerate sharply.”
Gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter after advancing at a 3.4 percent pace in the July-September period. Economists polled by Reuters had forecast GDP rising at a 2.3 percent rate in the fourth quarter.
Growth in 2018 was the strongest since 2015 and better than the 2.2 percent logged in 2017. The expansion will be the longest on record in July.
The stronger-than-expected fourth-quarter performance, which reflected solid consumer and business spending, was despite many headwinds, including financial market volatility and the United States’ trade war with China, raising optimism that an anticipated slowdown this year would not be abrupt.
The fiscal stimulus is believed to have peaked sometime in the fourth quarter. December economic data such as retail sales, exports, homebuilding and business spending on equipment weakened sharply.