LEAD 1-USA-Growth slowed less than expected in the fourth quarter


* Annualized growth of 2.6%

* Consumption decreases but remains stable

* 2018 growth slightly below Trump's target of 3% (Updated with details, increase in applications for unemployment benefits, comment and context)

from Lucia Mutikani

WASHINGTON, Feb 28 (Reuters) – The US economy slowed less than expected in the fourth quarter, still sustained by household consumption and corporate investment, but its growth for the entire year 2018 was slightly below target of 3% posted by the Trump administration.

Gross Domestic Product (GDP) grew 2.6% annualized in the last three months of the year, after + 3.4% in relation to the previous three months.

For the year 2018, growth was 2.9%, the highest annual value since 2015, after 2.2% in 2017, performance which is due in part to the $ 1.5 trillion tax cuts decided by the Trump administration and increased public spending.

Economists and analysts polled by Reuters forecast an average annualized growth of 2.3% but this consensus was established before the publication of several indicators that led some to revise their estimates downward.

"While most analysts were betting on a real collapse of US growth (…), it's quite a number that was published," says Mirabaud Securities.

"This will allow the President of the United States to be proud to have brought growth to almost 3 percent in its first full year and a 14-year high."


The first two months of this year were marked by several signs of slowdown, mainly manufacturing and labor market deceleration.

On Thursday, weekly job applications surpassed expectations by 225,000 and the number of unemployment benefit recipients hit a 10-month high in the week up to February 16.

These signs of slowdown are partly explained by the gradual dissipation of the impact of the tax reform and the continuing trade tensions between the United States and China.

They argue in favor of the cautious approach to interest rate developments adopted since January by the Federal Reserve, reaffirmed this week in Congress by central bank president Jerome Powell.

The publication of GDP statistics was delayed by the 35-day shutdown between the end of December and the end of January by federal administrations, which interrupted the collection and processing of economic data.

If it explains that it can not accurately measure the consequences of "closure," the Commerce Department estimates it amputated one tenth of fourth-quarter growth. He added that figures released on Thursday are "based on incomplete or revised data."


Household consumption grew 2.8% year-on-year in the last three months of the year, after 3.5% in the third quarter.

Business investment grew 6.7% in the fourth quarter, slowing since the first quarter of last year.

Foreign trade slowed growth in the fourth quarter by 0.22 percentage points, after cutting two points in July-September.

Business inventories increased $ 97.1 billion ($ 85.4 billion) in the fourth quarter, after a $ 89.8 billion increase in the third quarter. Its evolution represents a positive contribution of 0.13 points for growth from October to December, after 2.33 points in July-September.

In the markets, the dollar eliminated a large part of its losses against a basket of reference currencies after the publication of these numbers, and yields on US government bonds rose. Wall Street fell at the beginning of the trading session.


Lucia Mutikani;
Marc Angrand for the French service
Edited by Wilfrid Exbrayat


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