Market Update: US economy slows after turbulent year – Full Analysis

“The core of the economy is resilient,” Michael Pearce, chief US economist at Oxford Economics wrote on Friday, adding that he expected growth to pick up again this year.

Despite the underlying momentum, sharp swings in trade policy last year sent the economic data on a roller coaster ride.

The year started in a mild contraction, fuelled in part by a jump in imports – which subtract from growth in calculations of gross domestic product (GDP) – as firms rushed goods into the country ahead of anticipated tariffs.

Growth bounced back in the spring and summer, as foreign imports slowed, before decelerating again in the final months of the year, as imports started to recover.

The release of trade data on Thursday – which showed the trade deficit widening in December – had prompted a flurry of last-minute, downward revisions to growth forecasts for the October-December period.

But the slowdown was still more severe than many economists had anticipated.

While private investment picked up, it remained largely concentrated in intellectual property and IT-related equipment.

Consumer spending rose 2.4%, cooling from 3.5% in the prior quarter.

Government spending plunged more than 16%.

“The government shutdown ended up being a much bigger drag on the economy” than other data had suggested, Paul Ashworth, chief North America economist at Capital Economics wrote in a note. He said he expected that decline to be reversed in the months ahead.