Question

Please explain this article

THE U.S. ECONOMY GREW at a modest but still-steady rate at the end of 2018, slowing considerably after sky-high midyear growth.

Gross domestic product, a broad measure of goods and services produced in the U.S., rose at a seasonally adjusted annual rate of 2.6 percent in the final quarter of last year, according to initial numbers released

It's a significant dip from blockbuster reports earlier this year, when fallout from the Republican tax cut bill helped boost GDP growth to 4.2 percent in the second quarter and 3.4 percent in the third quarter, but experts say the growth is still a steady, albeit muted, showing.

The growth was driven by an uptick in consumer spending, particularly on motor vehicles and nondurable goods like prescription drugs, as well as health care services. Business investments, especially in intellectual property products, also fueled the growth.

Housing investments, however, dipped, counteracting other contributions. Retail sales also dropped in December.

GDP growth for the year hit 2.9 percent, the highest annual rate since 2015, whose number it matched.

Answer 1

In the above paragraph the US growth graph is being explained. In the mid year growth, the rate of increase in GDP i.e Gross Domestic Product was high due to various reasons like

• Republican tax cut bill- The cut in the tax helped increase the disposable income of the consumers in US and hence they increased their spending. This boosted the growth of GDP to 4.2% in second quarter and lagged at 3.4% in third quarter.
• Increase in spending - Spending of the consumers started to increase in automobiles and non-durable goods, this further help boost the growth rate.
• Increase of Investment - The investments in business sector also added to the high growth rate which resulted in projecting the highest growth rate since 2015, which was recorded as 2.9%

However this growth rate decreased at the end of 2018 because there was a dip in the housing investment sector and drop in the retail sale. This means that people were only buying goods from the manufacturing but not the retail shop. This resulted in drop of the sales of retail sector.

Yet the experts say that the growth is steady, at 2.6% which means that in order to sustain a good growth of the economy the particular percentage of growth is sufficient. At the steady growth rate, the capital, saving, investment, output and other macro variable are either growing at constant rate or exponentially. The paragraph basically explains the rise and fall of the GDP growth rates of the US economy.