by Calculated Risk on 1/16/2006 11:48:00 AM

MarketWatch reports: U.S. economy slows to below trend

The U.S. economy grew at the slowest pace in nearly three years in the just-concluded fourth quarter, economists now estimate.

Led by what could be the weakest consumer spending since 1991, the economy likely grew at about a 2.7% annual pace in the quarter after 11 straight quarters of growth above 3%, economists say.
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Few economists expect the slump to worsen significantly. For the first quarter, economists are estimating growth at 3.6% ... Most economists do see growth slowing again at the end of the year as the housing market weakens.
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Housing was one of the few bright spots in the fourth quarter's growth mix, along with inventory rebuilding. The weak sectors were consumer spending, business investment, exports and government spending.

"We do not believe the apparent weakness in the fourth quarter represents a clear change in the trend," said James O'Sullivan, an economist for UBS. GDP will likely slow from about 3.6% in 2005 to 3% in 2006 and 2.7% in 2007.