According to a report by the Department of Commerce, expansion of the American economy slowed in the fourth quarter of 2016, while annual economic growth failed to reach 3% for an 11th straight year. Meanwhile, the official score card for the economy -- gross domestic product -- showed expansion of 1.9% from October to December, the Commerce Department. That represents a drop from the 3.5% growth rate registered in the third quarter and below the 2.2% consensus compiled by the MarketWatch website.
In 2016, the US economy grew just 1.6%. In 2015, it had a little more pep at 2.6%. Therefore, it was at its weakest performance since 2011. The last time the economy had more than 3% growth — the historical average is 3.3% — was in 2005 during the George W. Bush administration.
Even with the President Donald Trump’s plans for revving up the economy with regulation and tax reductions coupled with government spending on public works, economists say it will take a while before the country sees a benefit. Many predict that the economy will grow at 2% or a bit faster in 2017. If Trump is successful, the country will see a benefit perhaps by the end of 2017 or early 2018.
A wider trade deficit, which pulls down GDP, was the greatest drag in the fourth quarter of 2016. Trade has been another major drag on the country due to a weakening world economy and a strong dollar that made American-made products more dear. At the end of 2016, exports sagged 4.3%. Trump appears to be aware of this, having mentioned the trade deficit with America’s southern neighbor this week in tweets about the Mexican president’s cancelled trip to Washington where they were expected to discuss the North American Free Trade Agreement.
Wall Street appears to be bullish about Trump, having seen an upward surge since his inauguration.