United States economic growth rate revised up to 2.9% in fourth quarter

U.S. Economic Growth Revised Higher to 2.9% in 4Q

U.S. Economic Growth Revised Higher to 2.9% in 4Q

Economist Ben Stein discusses how the Federal Reserve's decision on interest rate hikes could affect the economy.

Growth is also expected to pick up even more this year as the Republican tax cuts are likely to encourage more consumer spending and prompt businesses to invest more in new equipment, factories, robots and additional workers.

According to median estimate, the economy is expected to grow by 2.7 percent annualized rate in the fourth quarter. That was a slight moderation from the third quarter's brisk 3.2 percent pace.

The revision for growth in the final three months of 2017 reflects less inventory reduction than previously reported.

Real GDP increased at an annualised rate of 2.9 per cent in the last three months of past year, the third and final reading from the US Commerce Department showed. Housing data have been generally weak and the trade deficit hit a more than nine-year high in January. At least 120 countries have seen a pickup in growth in the past year, according to the International Monetary Fund, in a synchronized global upturn that hasn't been seen since 2010.

During the 2016 campaign, Trump promised to double growth, which has averaged a lackluster 2.2 percent annually since the recession ended.

That 2.9 percent fourth quarter advance followed gains of 3.1 percent in the second quarter and 3.2 percent in the third quarter.

But economists have been revising up their GDP forecasts for this year and 2019 based on Trump's success in winning approval in December of $1.5 trillion in tax cuts over the next decade and a February budget deal that will boost government spending on the military and domestic programs by $300 billion over the next two years.

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Current forecasts point to growth of below two percent in the first quarter of 2018, although first quarters typically are slower than annual growth.

Today, U.S. fourth-quarter GDP figure will be released at 12:30 GMT. USA stock index futures were mixed while the dollar .DXY was stronger against a basket of currencies.

Consumer spending in the fourth quarter, which accounts for over two-thirds of economic activity in the U.S., was revised up from the previously estimated 3.8 percent pace to a 4.0 percent rate.

The previous estimate for the rate of growth in the price deflator for personal consupmtion expenditures was unchanged at 2.5%. Those are the first full quarters that Donald Trump had been president.

Wednesday's report from the Commerce Department showed the improvement came in part from stronger consumer spending.

Nonresidential fixed investment rose 6.8 percent, up from 6.6 percent. Historically speaking US economy usually falters in the first quarter. And that rate was significantly faster growth than analysts were expecting. That was still the best performance since the third quarter of 2014.

The financial sector saw a US$14.6 per cent decrease but the non-financial sector experienced a US$19.4 billion increase for the quarter.

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