US economy slows but jobs up
THE US economy barely grew in the fourth quarter, although a slightly better performance in exports and fewer imports led the government to scratch an earlier estimate that showed an economic contraction.
Another report showed a drop in new claims for unemployment benefits last week, adding to a string of data that suggests the economy improved early this year.
Gross domestic product expanded at a 0.1pc annual rate, the Commerce Department said, missing the 0.5pc gain forecast by analysts in a Reuters poll.
The growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.
Still, much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter.
"The breakdown remains consistent with more positive future growth," TD Securities said in a note to clients.
Consumer spending was more robust by comparison, although it only expanded at a 2.1pc annual rate.
Because household spending powers about 70pc of national output, this still-lacklustre pace of growth suggests underlying momentum in the economy was quite modest as it entered the first quarter, when significant fiscal tightening began.
However, data on retail sales and from the housing market has suggested a tax hike enacted in January did not deal a big blow to households.
Most economists think economic growth will pick up substantially by the end of the year. (Reuters)