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The United States’ gross domestic product (GDP) expanded by 2.9 percent for all of 2018, its fastest clip in three years, although the economy showed further signs of deceleration in the fourth quarter, according to Commerce Department figures released Thursday.
The world’s largest economy also grew 2.9 percent in 2015, while the last year in which the growth rate was 3 percent or higher was 2005 (3.5 percent).
GDP expanded by an annual rate of 2.6 percent in the fourth quarter, beating economists’ forecasts for 1.9 percent growth.
Consumer spending, which accounts for roughly two-thirds of US economic activity, rose a higher-than-expected 2.8 percent, although that figure was down from 3.5 percent growth in the third quarter.
But the export sector continued to put a damper on the economy, with the US trade deficit climbing in the fourth quarter due to a 2.7 percent rise in imports and a lower 1.6 increase in exports.
President Donald Trump has made trade-deficit reduction a key economic priority and has renegotiated the North American Free Trade Agreement (NAFTA) linking the US, Canada and Mexico, although the revamped treaty still must be ratified by Congress.
The US also remains in a complex trade battle with China that has involved tariffs on hundreds of Chinese products and threats to impose additional levies unless the Asian giant makes structural changes to reduce the bilateral trade deficit and end unfair trade practices.
The US commerce secretary hailed the 2018 GDP figure as a key achievement of the Republican president’s administration.
“President Donald Trump has unleashed American growth at a pace the experts thought was not possible, approaching 3 percent real GDP growth in 2018,” Wilbur Ross said. “An America First agenda that prioritizes American jobs, American workers, and American industry instead of burdensome regulation and unfair trade deals has revitalized the American economy. America is back.”
Although the US economy remained robust in the fourth quarter, GDP rose more slowly on an annual basis than in the second and third quarters - 4.2 percent and 3.4 percent, respectively.
“This is not a bad performance; growth had to slow as the boost from the tax cuts faded, though the transition was eased by the plunge in gas prices,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients.
Trump has pledged to keep the economy growing at a brisk rate of 3 percent annually, a tall order considering that full-year growth did not hit that level once during the administration of his predecessor, Barack Obama.
The US Federal Reserve is forecasting growth of just 2.3 percent in 2019, due in part to the fading effect of Trump’s tax cuts.
The president has criticized the Fed for raising interest rates four times in 2018 and said it was “incredible” that the central bank has indicated two more rate hikes will occur this year.
The Fed has said it is returning its target federal-funds rate to a historically normal level after it had been held at near zero following the 2008-2009 global recession.