Investing.com - The U.S. economy grew less than thought in the fourth quarter, according to data published on Thursday that underlined the ongoing slowdown that has extended into 2019.
The third estimate of fourth-quarter gross domestic product (GDP) showed that the economy grew at an annual rate of 2.2%, downwardly revised from a preliminary estimate of 2.6%, and a sharp slowdown from the 3.4% reported in the third quarter of last year.
Economists had expected growth of 2.4%.
U.S. futures turned negative after the release, falling about 0.1% across the board. The U.S. dollar briefly pared gains against major rivals, but quickly returned to levels seen just prior to the report.
Looking forward, economists widely expect growth to slow further in 2019 as the stimulus from a $1.5 trillion tax cut package and increased government spending fades. A trade war between the U.S. and China, softening global growth and uncertainty over Britain's exit from the European Union are clouding the outlook.
Joseph Brusuelas, chief economist at accountancy firm RSM US LLP, pointed to the softer dynamic in consumption and gross private investment, along with the downward revisions to real final sales and gross domestic income.
“All reflect slowing in overall economic activity in December which spilled over into current quarter,” Brusuelas said.
Official forecasts indicate there is worse to come in the short term. The latest forecasts from the Atlanta and New York Federal Reserve Banks show that they expect first-quarter growth to slow further to around 1.2%.
The Federal Reserve cut its forecast for growth in 2019 at its policy meeting earlier in March. It now expects GDP to grow 2.1%, rather than the 2.3% it expected in December.
After that meeting, Fed chair Jerome Powell insisted that “underlying economic fundamentals are still very strong,” pointing to the labor market, rising incomes, low unemployment, and strong business and household confidence.