Hassett rips bad math on United States economic growth

Economists believe growth has slowed even more in the current quarter. He'll probably have much less to say about the new data, released this morning.

The US economy kicked into high gear a year ago, in the wake of sweeping tax cuts, but slowed in the final months, suggesting the boom had begun to fade, according to government data released today.

The 2.6% rate for the quarter is down from the previous two quarters, but the tally, which will be revised in the coming months, was a little better than expected.

"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. It's a perfectly respectable number, indicative of a healthy economy. Despite its duration, the expansion has been marked by the weakest annual growth rates of any recovery in the post-World War II period - just above 2 percent. Government spending slowed, trade was a minor drag and inventories gave GDP a small boost.

In a separate report Thursday, the government said that applications for unemployment benefits, a reflection of layoffs, rose by 8,000 last week to a seasonally adjusted 225,000.

Business spending on equipment accelerated in the fourth quarter from the prior period, growing at a 6.7 percent rate, after losing speed since the first quarter of 2018. December economic data such as retail sales, exports, homebuilding and business spending on equipment weakened sharply.

The main reason grows fell in the fourth quarter: a decline in consumer spending.

The growth figures had originally been due to be released in January, but were delayed because of the 35-day U.S. government shutdown.

The trade deficit widened further as a combination of the U.S. That weakness was offset somewhat by a gain in business investment and less of a drag from trade.

Falling worldwide trade subtracted 2% from the overall economy in the third quarter. That was down from a 3.4 percent rate in the July-September period and a sizzling 4.2 percent pace from April through June.

"There was a rapid buildup of inventories in the fourth quarter, so inventories likely will be a headwind for growth in the future", said Daniel Silver, an economist at JPMorgan in NY. Homebuilding has been weighed down by higher mortgage rates, land and labor shortages as well a tariffs on imported lumber. But non-defense spending fell at a rate of 5.6 percent, a drop that partially reflected the government shutdown.

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