(AA) – The U.S. economic growth slowed in the fourth quarter as businesses held back on investment, the U.S. Commerce Department said in a statement Friday.
Consumer spending stayed robust, however, as did non-residential fixed investment, state and local government spending, and residential fixed investment, all of which partly offset the decline in business investment, the statement said.
“The deceleration in real GDP (Gross Domestic Product) growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, a deceleration in non-residential fixed investment, and a larger decrease in private inventory investment,” the statement said.
Gross Domestic Product grew at a 2.2 percent annual rate. This was the third reading by the department, and it was not revised. The economy grew at a 5 percent rate in the third quarter.
After-tax corporate profits fell at a 1.6 percent rate in the fourth quarter, as a strong dollar dented exports and earnings from U.S. corporate divisions outside the U.S.
After-tax profits increased at a 4.7 percent rate in the July-September period. For all of 2014, profits dropped 8.3 percent, the largest annual drop since 2008.
Slower economic growth together with low inflation could prompt the Federal Reserve to delay raising interest rates until later this year. The central bank has linked an inflation rate rise to economic growth statistics, along with inflation rising close to its target of 2 percent.