Economic growth clocked in at 1.9 percent in the last three months of 2016.
Economic growth dragged during President Barack Obama's final three months in office. SUSAN WALSH/AP
The U.S. economy expanded at a 1.9-percent rate during the final days of President Barack Obama's tenure in the White House, according to gross domestic product revisions published Tuesday by the Census Bureau.
The somewhat underwhelming growth report – which follows an unrevised advance estimate published last month – didn't include any major update to headline growth. Both the first estimate and this second revision showed the economy expand at a 1.9-percent clip in October, November and December.
On the whole, the U.S. economy is believed to have expanded at only a 1.6-percent pace on the year.
But the details of the report show consumer spending was notably stronger than previously believed in the fourth quarter, while private investments were considerably weaker than what was shown in last month's advance estimate.
Such revisions are ultimately a good sign for the economy, considering consumer spending accounts for the lion's share of U.S. GDP growth. But the data tweaks also show significant room for improvement in the way of private fixed investment.
Personal consumption expenditures registered 3-percent growth in the fourth quarter – up 0.5 percentage points from a previously reported 2.5-percent gain. That's even with the 3-percent growth seen in the third quarter of 2016 and shows Americans were spending money at a comfortable clip in the second half of the year after a rough first couple of months.
Private nonresidential fixed investments, meanwhile, registered growth of 1.3 percent – down from a previously reported 2.4-percent gain. The metric, which serves as a proxy for companies' investments in equipment, facilities and technology to help make their payrolls more productive, has slogged through lackluster performance for years, and the downward revisions come just as data suggested it might be turning a corner.
Such investments are considered to be crucial to generating wage gains and standard-of-living improvements, so the unflattering revisions don't inspire much confidence in a more immediate turnaround.
Exports, meanwhile, improved slightly with the latest update, contracting at only a 4-percent pace rather than a previously reported 4.3-percent level. The quarter still amounted to the worst three-month window for U.S. exports since the beginning of 2015, however, and the persistently strong dollar isn't expected to help makers of American goods more successfully sell their products abroad in the immediate future.
Still, the first quarter of 2017 is expected to be markedly better than the first three months of last year, when the country was held to a meager 0.8-percent GDP gain.
Sam Bullard, managing director and senior economist at Wells Fargo Securities, wrote in a research note earlier this week that his expectations for the first three months of the year – and for 2017 as a whole – are roughly "in line with the moderate pace of growth seen so far in this recovery."
Incoming data so far this quarter suggest that the moderate pace of momentum seen in late 2016 has been extended into early 2017," he said.
Separately, the Federal Reserve Bank of Atlanta's GDPNow tool on Monday projected the U.S. economy would expand at a 2.5-percent clip in the first quarter of 2017.
