U.S. Economic Growth Faces Sharp Downturn

The U.S. economy's growth slowed significantly in the fourth quarter due to reduced consumer spending and business investment, as per revised government data. The growth rate was adjusted to 0.7% from an initial 1.4%. The economic outlook is further clouded by the U.S.-Israeli tensions with Iran affecting oil prices.

The United States saw a notable slowdown in economic growth during the fourth quarter, as revealed by revised data on Friday. Consumer spending and business investment declines played a major role, according to the Commerce Department's Bureau of Economic Analysis. The revised growth rate stands at 0.7% annually, downsized from the previously reported 1.4%.

In the third quarter, the economy expanded at a pace of 4.4%, but the reduction this past quarter is attributed to cuts in government expenditures, particularly in state and local government structures, and slowed export growth. Additionally, the 43-day government shutdown last year had a lingering negative effect on GDP growth.

Final sales to private domestic purchasers, excluding government spending, trade, and inventories, increased by 1.9%. Although this was less than the earlier 2.4% estimate and below the 2.9% growth in the previous quarter, growth expectations for this quarter are more optimistic. However, rising oil prices due to the U.S.-Israeli conflict with Iran pose risks to this outlook.

(With inputs from agencies.)