The U.S. economy slowed sharply at the end of last year, expanding at an anemic 0.7% annual pace as business investment and exports fell, the Commerce Department said Friday.
Growth in the October-through-December period was weaker than the 0.9% figure analysts had forecast and could raise new alarms about the U.S. economy's ability to weather a global slowdown and recent financial market turmoil.
The fourth quarter was the second straight in which total economic output, also known as gross domestic product, declined. The U.S. economy grew at a 2% annual rate in the third quarter and 3.9% in the second.
The new data, which will be revised two more times in the coming weeks, mean that the U.S. economy expanded 2.4% last year. That was the same as in 2014.
Consumer spending held up relatively well, with personal consumption expenditures increasing 2.2% in the fourth quarter. Still, that was down from 3% in the previous quarter.
But the U.S. economy was dragged down by a drop in exports and business investment. The rising value of the dollar compared with other currencies has made U.S. products more expensive abroad. Net exports declined 2.5% in the fourth quarter after increasing 0.7% the previous quarter.
Private domestic investment also declined 2.5% in the fourth quarter as businesses pulled back on spending.
Federal Reserve officials this week raised concerns about how the economy ended last year, and continued weak growth could lead them to delay planned future increases in a key interest rate.
Even as the jobs market produced strong gains in December, Fed policymakers noted that economic growth slowed as businesses spent less on their inventories, and that exports were "soft."
Fed officials did not rule out an increase in the central bank's benchmark short-term interest rate at their next meeting in March, but they indicated they would be watching U.S. data and global conditions to determine if a rate hike was warranted.
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