Yahoo Finance U.S. GDP growth tops expectations
Economic growth in the U.S. beat expectations in the fourth quarter of 2016.
The U.S. economy grew 2.1% in the final three months of 2016, according to the government’s third estimate of growth released Thursday morning. Economists had been expecting GDP growth to come in at 2%.
Personal consumption, which had disappointed in earlier estimates of this figure, rose 3.5% during the fourth quarter, topping economist expectations. Consumption accounts for about 70% of GDP.
In its release, the BEA said, “the general picture of economic growth remains largely the same.”
Boosting fourth quarter growth was the better-than-expected consumption figure, fixed investment in both the residential and non-residential markets, as well as state and local government spending.
Federal government spending was a drag on GDP while imports, which subtract from GDP, increased.
In 2016, the U.S. economy grew 1.6%, the slowest rate since 2011 and well below the 4% GDP growth President Donald Trump has pledged to oversee during his time in office. Last week, Treasury Secretary Steven Mnuchin discussed GDP growth rates closer to 3%-3.5% in an interview with Axios.
According to a GDP tracking measure published by the Atlanta Fed, first quarter growth should come in at 1%; most Wall Street economists are forecasting growth closer to 2%.
Thursday’s GDP report also comes as so-called “soft” data like consumer and business confidence surveys continue to top expectations. Earlier this week, a reading of consumer confidence hit its highest level since 2000.
Following Thursday’s release, analysts at Bespoke Investment Group noted that the main change in Thursday’s number was an increase in services consumption, which added 0.3% to fourth quarter GDP, while all other revisions took away .08% worth of growth.
“This was a decent final number for Q4 2016 growth,” the firm said, “but don’t get carried away with enthusiasm.”
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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