U.S. economic growth slowed slightly more than initially thought in the fiscal fourth quarter as the strongest pace of consumer spending in three years drew in imports and depleted inventories.
Revised figures released Wednesday by the U.S. Commerce Department showed gross domestic product expanded at a 2.5% annual rate in the final three months of 2017, instead of the previously reported 2.6% pace, a deceleration from the third quarter's brisk 3.2% pace.
The downward revision to the fourth-quarter GDP growth estimate largely reflected a smaller inventory build than previously reported. It was in line with economists' expectations.
The economy appears to have lost further momentum at the start of the year, with recent data showing retail sales, home sales, durable goods orders and industrial production declining in January. In addition, the goods trade deficit widened last month as exports fell.
First-quarter growth tends to be weak because of a seasonal quirk but is likely to accelerate for the rest of 2018 as the stimulus from a $1.5-trillion tax cut package and increased government spending kicks in. GDP growth estimates for the first three months of the year are as low as a 1.8% rate.
Economists harbor the opinion the economy will hit the Trump administration's 3% annual growth target this year, possibly putting pressure on the Federal Reserve to raise interest rates a bit more aggressively than currently anticipated.
