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The U.S. economy expanded at a slower-than-projected pace in the fourth quarter on drags from trade and inventories, offsetting strength in consumer spending and business investment that signals solid momentum entering 2018.

Gross domestic product rose at a 2.6 percent annualized rate after 3.2 percent in the prior period, Commerce Department data showed Friday in Washington. The median forecast in a Bloomberg survey called for 3 percent. Consumer spending, the biggest part of the economy, rose 3.8 percent, the best in more than a year. Business equipment investment grew at the fastest pace in three years.

While the report dashed expectations for the longest streak of 3 percent-or-better growth since 2005, a key measure of underlying demand delivered the strongest performance since 2014 and inflation picked up, which will help keep the Federal Reserve on track to raise interest rates in coming months.

U.S. GDP Grows Below-Forecast 2.6% on Trade, Inventory Drags

The U.S. economy expanded at a slower-than-projected pace in the fourth quarter on drags from trade and inventories, offsetting strength in consumer spending and business investment that signals solid momentum entering 2018.


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