US GDP slowed to 2.6% in Q4, bringing 2017 growth to 2.3%

Strong consumer spending, including on big-ticket durable goods, rose in the final quarter of 2017, but rising imports kept the US economy from growing as fast as expected (AFP Photo/SCOTT OLSON) (GETTY/AFP)

Washington (AFP) - The world's largest economy cooled in the final quarter of last year, expanding slower than expected, but 2017 still saw faster growth than 2016, according to government data released Friday.

After two quarters of expansion above three percent, GDP slowed to 2.6 percent in the October-December period, held down by a big jump in imports, according to the first estimate from the Commerce Department.

That was slower than analysts had forecast and meant growth for the year was 2.3 percent, up from the 1.5 percent in 2016 but far below President Donald Trump's three percent goal.

But the result is subject to revision by the Commerce Department as more data become available.

The figures do not reflect an anticipated boost to economic activity from massive US tax cuts enacted last month, although preliminary forecasts suggest additional growth may be modest.

Trump rose to power a year ago on a nationalist economic agenda, seeking to energize the US growth to three percent by revitalizing manufacturing and attacking bilateral trade deficits while slashing taxes and regulation and limiting immigration.

Making the case for his America First vision at the World Economic Forum in Davos, Switzerland, Trump said, "The world is witnessing the resurgence of a strong and prosperous America... America is open for business, and we are competitive once again."

- Durables have a good quarter -

The GDP data showed growth in the fourth quarter was boosted by consumer spending, home buying, and business investments.

Exports also had a good quarter as the US dollar continued to weaken, gaining 12.6 percent compared to the prior quarter, the largest jump in four years.

But imports, which subtract from GDP, rose an even faster 13.9 percent, the largest quarterly increase in more than seven years.

Analysts noted that despite the disappointing result for the period, there were lots of encouraging data points, including the increase in personal consumption.

"In short, growth was a bit less than generally expected, disappointing hopes for a third consecutive 3%-or-better quarter for the first time since 2005, but the details were stronger than the headline figure," said Jim O'Sullivan of High Frequency Economics.

Durable goods orders were another bright spot for the quarter, with sales of large, factory-made items rising by 8.2 percent, the biggest quarterly gain in 14 years.

In a separate report Friday, the Commerce Department said orders for civilian and military aircraft lifted durable goods sales in December for the second straight month while auto sales slowed.

Total orders for big-ticket US-manufactured goods rose 2.9 percent compared to November to $249.4 billion, the biggest jump in six months, leaping past economists' predictions of a 0.9 percent gain.

Military plane sales rose 55.3 percent over November while civilian aircraft orders also gained, with a 15.9 percent increase.

But autos gained only 0.4 percent -- giving back some of November's post-hurricane bounce, when sales rose two percent as car owners replaced damaged vehicles.

Excluding the volatile transportation sector, durable goods sales were less pronounced, rising only 0.6 percent for the month.