Overall, the full-year figures show that while the US economy has slowed in rate-of-growth terms, it is still squarely in expansion territory.
The Bureau of Economic Analysis revealed the fourth quarter to have seen a 2.1% growth in the U.S economy.
All in all, the GDP report is one that should be viewed as more or less tame and not one that was likely to rock the Federal Reserve's view on interest rates at the same time it should not have rocked the markets greatly in either direction. Net exports added 1.48 percentage points to the quarter's 2.1% growth rate, the largest contribution since the second quarter of 2009.
The economy's growth slowed throughout 2019.
The forecast was, however, made before Wednesday's advance reports showing a sharp widening in the goods trade deficit in December as well as a drop in wholesale inventories. Retail inventories were unchanged last month. On the one hand, personal consumption expenditures contributed 1.2 percentage points of the 2.1 percent top-line growth, and year-over-year growth rates continue to exceed 2.5 percent since 2017. The data triggered some economists to cut their fourth-quarter GDP growth estimations by up to five-tenths of a percentage level to as low as a 1.4% rate.
Economists estimate the speed at which the economy can grow over a long period without igniting inflation at around 1.8%. The president's tax cuts, which he and his supporters claimed would bring a boom of economic growth, have fueled the deficit while largely benefiting the wealthiest Americans and corporations.
The so-called Phase One trade deal with China has put the dispute between the world's two largest economies on the back burner, but ongoing tensions are likely to keep businesses in the sidelines.
Fed Chair Powell also said the risks from trade tensions remained and businesses were adopting a "wait and see attitude".
With confidence among United States chief executives remaining low in the fourth quarter after dropping to a 10-year low in the prior quarter, a rebound is unlikely soon.
Business investment likely contracted further in the fourth quarter after declining by the most in almost four years in the July-September period.
Business investment is also seen pressured by Boeing's suspension this month of the production of its troubled 737 MAX jetliner, which was grounded last March following two fatal crashes.
The economy's expansion last quarter reflected a boost from trade as exports increased and imports dropped sharply.
"Consumer spending and residential investment posted notable gains, propelling GDP growth and setting the stage for future economic expansion", a release from the White House's council on economic advisors noted. However, this estimate may be too high given the December recovery in imports reported in yesterday's data.
A key measure of business spending - nonresidential fixed investment, reflecting spending on commercial construction, equipment and intellectual property products like software - fell at a 1.5% rate, reflecting a decline in structures and equipment investment. Imports in the fourth quarter included the smallest value of inbound petroleum and products in 18 years. On the other hand, growth in goods spending weakened to just 1.2 percent (annual rate), and growth in personal income has slowed by over a percentage point.