Wider trade deficit slashes GDP, but consumers keep spending

WASHINGTON (MarketWatch) — The U.S. economy slowed in the fourth quarter and annual growth failed to reach 3% for the 11th straight year, reflecting the huge hurdles the new Trump administration faces in trying to speed up a 7 ½-year-old expansion.

Gross domestic product, the official scorecard for the economy, expanded at a 1.9% annual clip from October to December, the Commerce Department said. That's a marked drop from a 3.5% growth rate in the third quarter and below the 2.2% MarketWatch-compiled consensus.

U.S. stock futures YMH7, -0.07%  were pointing to a weaker start. However, the Dow Jones Industrial Average on Thursday finished at a record high and is up 25% over the last 52 weeks.

For the full year, the U.S. grew just 1.6%, down from a 2.6% clip in 2015. The last time the U.S. topped 3% growth — the historical average is 3.3% — was in 2005.

President Donald Trump has vowed to push the economy into a higher gear with an aggressive combination of tax cuts, reduced regulations and more government spending on public works. Yet economists say it will take time before the U.S. reaps any benefits.

Most predict the economy will grow around 2% or a bit faster in 2017. If Trump's approach works, the payoff is unlikely to come until the end of the year or early 2018, they say.