U.S. economic growth unexpectedly slowed in the fourth quarter as the strongest pace of consumer spending in three years resulted in a surge in imports.
Gross domestic product expanded at a 2.6 percent annual rate, the Commerce Department said in its advance fourth-quarter GDP report on Friday. That followed a 3.2 percent growth pace in the third quarter.
Imports, which subtract from GDP growth, increased at their fastest rate in more than seven years. Rising imports underscore the challenges that the White House faces in its quest to boost annual GDP growth to 3 percent.
A measure of domestic demand jumped at a 4.6 percent rate, the quickest since the third quarter of 2014, highlighting the economy’s strength. Final sales to private domestic purchasers rose at a 2.2 percent pace in the third quarter.
Strong domestic demand is part of a synchronized global rebound that includes the euro zone and Asia. Demand has also been buoyed by President Donald Trump’s promise of hefty tax cuts, which was fulfilled in December when the Republican-controlled U.S. Congress approved an overhaul of the tax code.
The economy grew 2.3 percent in 2017, an acceleration from the 1.5 percent logged in 2016. Economists expect annual GDP growth will hit the government’s 3 percent target this year, spurred in part by a weak dollar, rising oil prices, and a strengthening global economy.