GDP growth was a mere 1.9 percent in Q4 2016

Posted January 28, 2017

Growth in the world's largest economy over the whole of 2016 was 1.6 per cent, a fall from 2.6 per cent the year before.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.6 per cent in its initial estimate for the fourth quarter of previous year, in line with 0.6 per cent in the second and third quarters.

As we mentioned last month, December's 3.5% third quarter growth rate was truly impressive.

Despite the better-than-expected figures, analysts warned the outlook for the United Kingdom economy remained gloomy. "The last time the US topped 3% growth - the historical average is 3.3% - was in 2005".

For 2016, the economy grew 1.6 percent.

On Thursday 26 January at 0930 GMT, the Office for National Statistics will release its first estimate of Q4 GDP growth, and growth for the full year of 2016. A strong dollar can hurt manufacturers by making USA exports more expensive for foreign customers.

While economists look fairly positively on the progress that the USA has made since the recession, current GDP growth is far below the 4 percent target President Donald Trump has said he is aiming for. Some forecasters have raised their projections for US growth this year and in 2018 in anticipation of tax cuts and infrastructure spending.

"It's positive that the United Kingdom economy is still experiencing growth". "But frankly we think it's probably too early to figure out what that might be and how it might manifest itself".

The strength of the dollar also weighed on the economy, Logan said, making imports more attractive and expanding the trade deficit.

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"To the extent that United Kingdom growth continues to be driven by growth in consumption, then next year could be challenging if inflation continues to rise and reduces any growth in real living standards". "Although I am cautiously optimistic that some of these forces will abate over time, I anticipate that they will continue to restrain overall growth over the medium term".

The U.S. economy's growth slowed to 1.9 percent in the last quarter of 2016, President Obama's final three months in power.

By contrast, the construction and production sector provided only "negligible" contributions to growth, the ONS said.

While headline orders remain in negative territory, business investment appears to be gaining footing, which could be a positive indication for 2017, if said growth can be maintained, said Piegza.

U.S. economic growth slowed more than forecast last quarter on the biggest drag from trade in six years and more moderate consumer spending, Bloomberg reported. Stockpiling added to growth more modestly in the third quarter after serving as a drag for over a year.

Exports fell in the last quarter, dragging on growth, according to the preliminary estimates, while the rate of growth of personal consumption also slowed.

"The economy has strong underlying fundamentals", Ryan Sweet of West Chester, PA-based Moody's Analytics Inc., said prior to the Commerce Department's report being released.

But crude prices partly rebounded past year, prompting oil producers to revive shuttered wells and order more steel pipes and other materials.

The price index for gross domestic purchases increased 1.0% in 2016, compared with an increase of 0.4% in 2015. Investment has been weak during this expansion despite low interest rates (low borrowing costs), high stock prices and generally well-functioning capital markets.