US economy grew at 2.6% rate in fourth quarter

The U.S. economy grew by a rate of 2.6 percent this winter, beating analysts' estimates of 2.3 percent thanks to solid consumer and business spending.

It also bested GDPNow, a real-time tracker monitored by the Federal Reserve Bank of Atlanta, which lowered its estimate to 1.8 percent earlier this week, largely because of a grim outlook for retail sales, which took a hit, in part, due to the shutdown.

“Overall, with expectations fairly low going into this report, this was a positive surprise that should reinforce the overall health of the U.S. economy for investors,” said Charlie Ripley, senior investment strategist for Alliance Investment Management.

Release of the fourth-quarter GDP by the Bureau of Economic Analysis (BEA) was delayed by almost one month as a result of the 35-day partial government shutdown, the longest in U.S. history.

In 2018, the GDP increased by an estimated 2.9 percent (compared to 2.2 percent in 2017), narrowly missing the Trump administration's goal of 3 percent growth for the year. That’s essentially the same annual growth as in 2015, which was the fastest pace since 2005.

"For the full year, growth was impressive, but the outlook for 2019 is expected to be more muted between fading global prospects, less lift from the tax cut and the clouds surrounding Brexit and U.S.-China trade,” said Mark Hamrick, the chief economist for

White House officials also applauded the number. Commerce Secretary Wilbur Ross said the GDP  -- which he said was buoyed by the 2017 Tax Cuts and Jobs Act -- “beat expectations comfortably.”

“President Trump has unleashed American growth at a pace the experts thought was not possible, approaching 3 percent GDP growth in 2018,” he said in a statement.

In the middle of February, U.S. retail sales recorded their biggest drop in more than nine years, spurring fears about an economic slowdown and a drop in consumer spending at the end of 2018. According to the Commerce Department, retail sales fell by 1.2 percent, the largest decline since September 2009, when the U.S. was still recovering from the Great Recession.

The BEA generally provides three estimates of the GDP for each quarter; however, they will only provide two readings this quarter. The final reading remains on track for March 28.


In the July-September period, the U.S. economy grew by 3.4 percent.