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Image: New York City's New Hudson Yards Development Boasts Luxury Shopping
Visitors walk through the newly opened luxury shopping mall at the Hudson Yards in New York on March 18, 2019.Spencer Platt / Getty Images file

March 28, 2019, 6:27 AM PDT By Reuters

The U.S. economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the Trump administration’s 3 percent annual target, and corporate profits failed to rise for the first time in more than two years.

Gross domestic product increased at a 2.2 percent annualized rate, the Commerce Department said on Thursday in its third reading of fourth-quarter GDP growth. That was down from the 2.6 percent pace estimated in February.

The economy grew at a 3.4 percent pace in the third quarter. The expansion will be the longest on record in July.

The revisions to the fourth-quarter GDP reading reflected markdowns to consumer and business spending, as well as government outlays and investment in homebuilding.

For all of 2018, the economy grew 2.9 percent as previously reported, despite the White House’s fiscal stimulus of $1.5 trillion in tax cuts and more government spending. Growth last year was the strongest since 2015 and was an acceleration from the 2.2 percent logged in 2017.

Compared to the fourth quarter of 2017, the economy expanded 3.0 percent, revised down from the 3.1 percent reported last month. President Donald Trump has highlighted the year-on-year growth figure as proof that fiscal stimulus, which has contributed to a swelling of the federal government deficit, has put the economy on a sustainable path of strong growth.

Trump likes to showcase the economy as one of the biggest achievements of his term, declaring last July that his administration had “accomplished an economic turnaround of historic proportions.” On the campaign trail, Trump boasted he could boost annual GDP growth to 4 percent, a goal analysts always said was unrealistic given low productivity, among other factors.

Economists polled by Reuters had forecast GDP in the fourth quarter being revised down to a 2.4 percent.

There are signs the slowdown in growth persisted early in the first quarter, with retail sales rising modestly and manufacturing production and homebuilding tepid.